20 August 2008

WOOLIES FREEZE OUT BID FROM ICELAND FOUNDER MALCOLM WALKER


A takeover bid by a consortium headed by Malcolm Walker the founder of Iceland Frozen Foods has been rejected by Woolworths Group Plc.

It is understood that Walker has insisted on a number of conditions being imposed on the company including the board being required to retain most of the group's debt and pension liabilities, which is believed to run in to tens of millions of pounds. The extent of the shortfall in Woolworths company pension scheme is currently under review.

According to a statement by Woolworths yesterday, Walker’s offer effectively asks Woolworths to pay him to take the beleaguered retailer off their hands?

Walker is thought to have teamed up with Woolworth’s largest investor Bauger Group which already holds a 10% stake and Ardeshir Naghshineh who owns (at the last notification) 10.2%.

The Former Chief executive of Focus DIY, Stephen Johnson, who is due to take the reigns on 1st September this year will be hoping that Woolworths battered shareholders do not force a deal that will prevent Johnson the chance of turning the company around. It is unclear, however, that if a deal is done before Mr. Johnson's official appointment on the 1st September whether the multi-million pound remuneration package that forms part of his terms of employment would be payable?

Woolworth's shareholders, who have seen the value of their shares collapse over the last few years, will be heartened that Walker does not appear interested in Woolworths Group's valuable entertainment wholesale unit, or their music and video publishing joint venture with BBC Worldwide (the commercial arm of the BBC) and only wants Woolworth’s chain of 800, or so stores.

In recent months there has been increasing speculation that Woolworth’s property portfolio and retail operations are damaging the company’s ability to develop the entertainment and wholesale arms of the business. If this is true there may be some merit in the Walker deal that should release value to Woolworth's shareholders, whether that be by a rise in the share price, or by a special payment on the completion of the deal.

Having founded and successfully built Iceland in the 70's, which became one of the great wonder stocks of the 1980’s, Malcolm Walker will undoubtedly have a joined-up plan for Woolworths retail division. Any half hearted rejection of Walker's offer should not be brushed aside lightly by the board, or their shareholders.

Woolworths said it is currently reviewing its operations and is expected to announce "further details on the issues and opportunities highlighted by the recent review will be with the Group's interim results on 17 September 2008." The shares at just 7.39p were up 11% on the news.

Comments Welcome

2 comments:

Anonymous said...

Hi,

Think the stock alone worth 390m (in a going concern situation) so MW would need to pay more than 50m

Point we could be missing is that the 50m seems to be the result of a a friendly bid situation - what comes next is sod em we'll buy the lot and sell off what we don't want.

Walker would probably prefer not to have the hastle and cooperate but if not then hostile takeove is likely before they have to pay SJ 9million for nothing - Walker has "degree in common sence" you know!!

Anthony Bounds said...

There is an intelligent thread on the Advfn Bulletin Board that is discussing the possible links between Ardeshir Naghshineh, Bauger Group and Malcolm Walker.

I take the point made by the investor running the thread (Davy99).

My research cannot prove a link between the three possible components (not surprising really) however, it the three of them do appear to have a certain symbiosis don't you think.

Good luck to those invested - fascinating situation and I doubt we have hear the last of Mr Walker on the subject.