Baugur consortium's £326m BFG bid has £3.2m break fee

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The Independent Online

Big Food Group will pay Tom Hunter, who has teamed up with Baugur to make an agreed £326m takeover offer for the Iceland owner, £1.3m if a rival bid appears, it emerged yesterday.

Big Food Group will pay Tom Hunter, who has teamed up with Baugur to make an agreed £326m takeover offer for the Iceland owner, £1.3m if a rival bid appears, it emerged yesterday.

The sum is part of a £3.2m inducement fee that will be split between Mr Hunter, Baugur and Bank of Scotland's investment vehicle should BFG's directors recommend a competing offer.

The Baugur consortium's bid vehicle, Giant BidCo, has agreed to pay 95p a share for BFG, which will be split into its constituent parts: Iceland, Booker and Woodward if shareholders back the deal. It dropped the price after the group's trading deteriorated.

The group's underlying sales decline has accelerated to 3.9 per cent in the five weeks to 10 December from 3.1 per cent in the five weeks to 5 November. Like-for-like sales at Iceland fell 4.9 per cent during the past five weeks, after sliding 3.4 per cent in the previous five weeks.

Documentation for the deal, which will be effected via a scheme of arrangement, showed that Kevin Stanford, a member of the bidding consortium and co-founder of Karen Millen, will hold an 8.9 per cent stake in the new company, while Mr Hunter will take 13.4 per cent. Mr Hunter is a key investor in a separate consortium that is buying BFG's properties for £213m.

Malcolm Walker, the former Iceland chairman, will invest an unspecified sum for an equity stake in the frozen food chain, which Giant BidCo will sellto the IceCo consortium for £150m.

No decision has been made about whether Bill Grimsey, the chief executive of BFG, will stay on to run Booker, the documents showed. The deal will be put to shareholders on 21 January.

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