According to today’s issue of The Times, Citigroup has been appointed to attract bids for supermarket chain Somerfield. The value of the retailer is now being estimated at around £2.5 billion.
As reported earlier this week on freshinfo, there have already been at least three expressions of interest for the 955-store group, bought by a consortium comprising property tycoon Robert Tchenguiz, Barclays Capital and Apax Partners, the private equity firm, for £1.8bn two years ago.
The obvious potential bidders already being chewed on by the rumour mill are Sainsbury’s, Morrisons and Asda, but The Times also names Waitrose and Marks & Spencer as possible contenders. The newspaper report said: “A source told The Times that interested parties were being asked to sign confidentiality clauses. Another source said that John Lovering, the Somerfield chairman, had been actively touting the business.”
Any sale in the next few months would go against the predictions of senior bankers, who have forecast consolidation in the retail sector in the second half of the year.
The Association of Convenience Stores (ACS) said the sale of the £2.5 billion group is the latest major step in the consolidation of the grocery market, and that a successful bid from any of the current "big four" would be a backward step for the market and for consumers.
ACS chief executive James Lowman said: “We have warned about the repercussions of further acquisitions in the UK grocery market. It is this ongoing consolidation of the market into the hands of just four companies that reduces the opportunity for businesses to enter and grow in the market.
"The lack of choice and diversity that this presents now and in the future is a major blow to consumer interests."
Citigroup is said to have been briefed to sell the company as a whole, although speculation suggests most potential buyers would be interested only in a broken up package of stores.
Neither Citigroup or Somerfield has commented to date.
