Somerfield demands bid talks’ conclusion; reports 1.8% drop in sales |
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Sat, 10 Sep 2005 11:05
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LONDON: Bristol-based supermarket group Somerfield today reported comparable sales declining 1.8 percent in the first quarter and demanded a conclusion to the long-running bid battle.
The group asked its suitors to reach a decision and table a formal offer soon. Among the suitors were two consortia: one led by property tycoon Robert Tchenquiz and comprising investor groups Apax and Barclays Capital; and the other comprising the Livingstone brothers - Ian and Richard with Nomura Holdings.
Two months ago the supermarket had said talks about a takeover by either consortium were at an advanced stage. Since March 31, Somerfield has been holding talks with the potential buyers.
The group’s business of about 1,300 stores in the UK is currently valued at approx. £1.13 billion. Shareholders fear the bidders could be using the prolonged talks to acquire the group cheaply with cut-price offer. Without a bid the group’s market value could drop to 165 pence a share giving a potential bidder the chance to make a lower bid than expected.
Meanwhile, the supermarket said it was reasonable satisfied with its performance over the first quarter despite the decline in like-for-like sales. Group sales marked an upturn compared to the 2.7 percent decline seen in the first nine weeks. This was on account of a 1.6 percent rise in sales in the last seven weeks. Even its budget stores division - the Kwik Save chain which had been struggled over the entire first quarter, saw sales improving in the last seven weeks, showing declines of just 4.8 percent.
The supermarket group said trading conditions were tough because of the slowdown in consumer spending, which affected every retailer. However, the group said it was quite satisfied with its progress. First quarter total sales were up 17 percent Y-O-Y because of its acquisitions, viz. the Morrisons supermarket’s 115 stores.
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