Bullish Icelandic venture-capital group Baugur has made a £1billion takeover approach to UK supermarket chain Somerfield.
Baugur, already owns a five per cent stake in the group, and is the biggest retail owner in Iceland. It has been making steady in-roads into the UK with its December 2004 agreement to buy Big Food Group, owner of the Iceland retail chain and Booker wholesale business.
Under the bid proposal, Somerfield’s management would continue to run the firm which also operates the Kwik-Save chain.
The company said it was considering the proposed offer.
Meanwhile, shares in Somerfield leapt some 13 per cent on the news to 183.5 pence as the Journal went to press.
But the move has left market analysts curious. “ The Somerfield fascia has been performing strongly and has rebuilt its margins,” said retail analyst Paul Smiddy at Baird.
“The hope would be for margin improvement through consolidation with Big Food Group,” he told the Journal.
“It seems they are trying to make the best of a bad job after over-paying for the Big Food Group so it will be interesting to see where they go from here.” It is likely to be at least another two to three weeks before a formal offer is launched.
