David Prosser: Home Retail Group not in play after all

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The Independent Online

Outlook Bad news for those hoping to see a takeover of Home Retail Group. The Independent's Investment Column suggested yesterday that gossip it might be about to get an offer was likely to prove wide of the mark – and so it is already proving.

The latest round of speculation was prompted by the name Madison Dearborn Capital Partners, which appeared on a regulatory news statement on Tuesday detailing the building of a 4.25 per cent stake in the retailer. Since Madison Dearborn, a US investor, is known as a buy-out specialist, that sparked interest. The gossip was premature, however – it isn't Madison Dearborn itself that holds the stake but Tradewinds, a mutual fund. Although it has affiliations with Madison Dearborn – hence the latter's name on the RNS – it makes its own investment decisions. And it doesn't do buy-outs.

Another rumour scotched then. Is Home Retail Group an attractive opportunity for an alternative buyer? Well, both its subsidiaries, Homebase and particularly Argos, are decent enough performers. But as my Investment Columncolleagues pointed out yesterday, the stock looks pricey at a time when the high street is such hard work. For now, the takeover speculation looks like hope rather than expectation.