Apax walks away from Woolworths bid after seeing books

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The Independent Online

Woolworths was last night left to confront the challenge of trading its way out of the retail downturn after its suitor, Apax Partners, made the shock decision to abandon its proposed £837m bid for the pick 'n' mix retailer.

Woolworths was last night left to confront the challenge of trading its way out of the retail downturn after its suitor, Apax Partners, made the shock decision to abandon its proposed £837m bid for the pick 'n' mix retailer.

The private equity firm raised question marks over Woolworths' accounts by blaming its decision to drop its proposed 58.2p-a-share offer on queries concerning "certain key cash items".

Its abrupt withdrawal, announced long after the stock market had closed, surprised analysts who had expected Woolworths to be the next retailer to delist after it agreed to open its books for Apax last month.

Paul Smiddy, at Robert W Baird, cast doubt on the prospect of fresh bidders. "The venture capital community is fairly close knit. If Apax didn't like the smell coming out of Woolworths, others would think twice about looking."

Some retail observers speculated Apax had lost interest after becoming involved in a possible £1.1bn bid for the supermarket chain Somerfield. The private equity group declined to comment beyond, saying that despite undertaking "intensive commercial due diligence" it had been "unable to confirm certain key cash items".

The talks are thought to have broken down over Apax's concerns at how much it could cost Woolworths to close its MVC music chain if it fails to find a buyer. The other issue is understood to have concerned the necessary capital expenditure to complete the group's withdrawal from its 16 remaining big W stores.

Gerald Corbett, Woolworths chairman, said: "It is difficult dealing with VCs. We had a bad experience four years ago. We turned down Apax's initial proposal but felt we had to give them a chance when they came back at 58p."

Woolworths insistedthe big W disposals were proceeding to plan, as was the sale of MVC, which it expects to yield "a potential cash upside". It declared itself "satisfied" there was no further information to disclose on its cash position, and said like-for-like sales had continued to dive, falling 3 per cent in the first 10 weeks of its year.

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