Sir David is fronting a powerful consortium which, if successful, would see the complete break up of the 70 year old retail and football pools group which is the largest privately owned business in Britain.
Under the terms of the offer, N Brown would take control of Littlewoods catalogue shopping operations while Iceland, the high street frozen food retailer, would take over the group's chain of high street shops. Ladbroke, which operates the Vernons pools business, has been given first option on Littlewoods pools. The deal is being backed by Royal Bank of Scotland and Charterhouse Bank and values Littlewoods at pounds 1.1bn.
Sir David will meet Littlewoods chairman Leonard van Geest today to discuss the deal which is thought to have the support of some members of the Moores family which controls the group.
The deal is likely to deliver a fatal blow to the rival pounds 1.2bn offer for the group which has been tabled by Barry Dale, the former Littlewoods chief executive who was dismissed from the group in March. Sir David is thought to enjoy a good relationship with both the Littlewoods board and the Moores family.
Sir David said yesterday: "I think the family has come to the point that they have to make some decisions. They can't leave it as it has been in the past."
He added: "This is two families getting together. Both in the North. Both in the same business." Sir David's offer will enable some Moores family members to hold shares in the enlarged N Brown and Sir David will accept a dilution of his 58 per cent holding in the company.
Sir David said that he had written to Littlewoods three weeks ago on behalf of N Brown and Iceland, saying finance was available for a deal if shareholders were interested. This followed separate approaches earlier in the year when N Brown and Iceland had expressed an interest in the home shopping and high street stores divisions, respectively.
Under the terms of the deal, N Brown would pay approximately pounds 650m in new N Brown shares, with a cash alternative backed by Royal Bank of Scotland.
Iceland would pay around pounds 450m cash for Littlewoods' 128 retail properties. This would be funded by new debt facilities and the sale of the freehold property portfolio to a joint venture property company for around pounds 300m.
Ladbrokes has been offered first option on Littlewoods football pools business which is valued at around pounds 100m.
The deal would be a significant leap for N Brown, hitherto a niche player in the UK's mail order market with a share of around 5 per cent. It made pre-tax profits of pounds 26.5m last year on sales of pounds 208m.
It is highly efficient and has been looking to extend its interests beyond its core customer base of the over-50s. It should also look to introduce more direct selling to Littlewoods mail order operations which are still dominated by the old-fashioned agency system.
Iceland feels it can improve the profitability of the Littlewoods shops which earned pounds 34m on sales of pounds 501m last year. It has operated foodhalls in 38 branches of Littlewoods since 1992..Reuse content