Baugur has always been somewhat inscrutable, and details of precisely how it will prove that the sum of Big Food Group’s parts are worth more than its whole are unlikely to emerge for several weeks.
However, one thing is clear, says a Baugur spokesman: any synergy benefits from the unlikely marriage of Booker and Iceland have been far outweighed by a loss of management focus caused by the merger, and Iceland has proved such a drain on management time and resources that Booker has effectively been run for cash since it tied the ill-fated knot in 2000.
Few would argue with the broad thrust of Baugur’s plan: to sell Woodward Foodservice and run Iceland and Booker as separate businesses with dedicated investment, management and time to grow without being hung drawn and quartered by the City every three months.
Far more intriguing, however, is the fact that the very people Baugur is parachuting in to drive BFG’s turnaround strategy are those many observers largely hold responsible for its problems in the first place. The man charged with returning Iceland to its former glory? Comeback kid Malcolm Walker, who left the company in a blaze of bad publicity just four years ago.
And Booker? There are strong rumours that members of Baugur’s consortium want BFG chief executive Bill Grimsey to take the helm, though he remains tightlipped.
Not surprisingly, the plans have generated considerable surprise within the industry. No one denies his achievements or his passion for frozen food, but if Walker took Iceland down the wrong road in the first place - why is he coming back? And if Grimsey could not improve Booker’s fortunes as CEO of its parent company, doesn’t that make him a odd choice to take the helm now?
Even more perplexing is Baugur’s plan to let Walker take Iceland back to its roots with a more basic freezer centre offer.
Just because some smaller chains are managing to grow in the current climate does not mean that the freezer centre format will work at a national chain with a raft of busy high street and city centre locations, point out the sceptics.
Indeed, of the four different Iceland store formats tested by the company over the last three years, the basic freezer centre was so unpopular with customers that it was dropped from the mix altogether, while stores with a stronger convenience element have been consistently more successful.
In fact, some would argue that Walker was only too aware that the days of the national freezer chain were numbered back in the 1990s, which was why he started trialling new formats such as Iceland Extra, tried out non-GM for size and pumped millions into turning his veg organic.
But customers were not impressed. So he pulled off his most daring stunt yet - a merger with the country’s largest cash and carry operator.
Some analysts argue that it was Walker’s strategic mistakes that made it almost impossible for new CEO Bill Grimsey to emerge from his stint at BFG smelling of roses when he arrived in January 2001.
For a start, there was more than £600m in debt to repay from the Booker deal, reportedly millions of pounds of contracts to settle with organic food suppliers, and sales had gone through the floor.
Within days, Grimsey was forced to issue a profits warning and by the end of the month, Walker had resigned.
Since then, argue these analysts, Grimsey has tried to make the best of things with a major refurbishment programme at Iceland and an aggressive drive into symbol group retailing at Booker. When Baugur finally came knocking at its door, 95p was probably the best shareholders could hope for.
Terms of the deal
>>set to go through on February 11
Icelandic investment company Baugur, which has been building up a stake in Big Food Group for two years, finally pounced in late December. Under its 95p-a-share, £326m offer, a consortium led by Baugur and partners including entrepreneur Tom Hunter and Nordic bank Kaupthing, BFG would be broken up. Iceland is to be sold to a new company set up by the consortium and Booker run as a separate business. The deal is set to go through on February 11 if shareholders accept.