Baugur joins Tchenguiz bid consortium for Somerfield

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The Independent Online

Shares in Somerfield slipped yesterday after it emerged that Baugur, the Icelandic retailer stalking the supermarket group, has thrown its lot in with a rival consortium including Robert Tchenguiz, lessening the prospect of a bidding war.

Shares in Somerfield slipped yesterday after it emerged that Baugur, the Icelandic retailer stalking the supermarket group, has thrown its lot in with a rival consortium including Robert Tchenguiz, lessening the prospect of a bidding war.

Baugur, headed by Jon Asgeir Johannesson, kicked off the bid interest in Somerfield with a 190p-per-share approach. It has has teamed up Mr Tchenguiz, Barclays Capital, and Apax Partners, on the advice of Kaupthing, an Icelandic bank that is close to both parties.

The move will increase the pressure on the Livingstone Brothers, whose London and Regional Properties is also in talks with Somerfield, to raise the level of its bid. Market sources said the Livingstones were planning to lure a big retail personality to front their bid. Topland, another property company, is also thought to be running its slide rule over Somerfield.

The Baugur/Tchenguiz consortium has not raised the 205p-per-share proposal that is thought to be on the table. It has started limited due diligence and is not planning to firm up its offer until it has spent more time pouring over Somerfield's books. Somerfield's shares fell 2p to 212p.

The former rivals agreed to team up after realising they would be better placed to launch a firm bid if they combined their skillbase and financial firepower. "We believe the members of the consortium provide considerable operational and financial skills together with substantial experience in the sector," it said, adding it believe it was "very well placed" to put forward an "attractive" proposal "both in terms of value and deliverability".

Any bid would require the current management team, led by Steve Back, Somerfield's chief executive, to stay on. The consortium lauded the "substantial progress" made by Mr Back and John von Spreckelsen, the chairman, adding: "We are excited by the prospect of investing in Somerfield to continue its growth and development".

But it cautioned: "Discussions are at a very early stage and, inter alia, subject to completion of a due diligence exercise. There can, accordingly, be no certainty that any offer will be forthcoming or of the terms of any such offer".

It is the first time that Somerfield, which yesterday declined to comment, has opened its books to any prospective buyers.

Analysts believe Somerfield is the last jigsaw piece in the supermarket puzzle that is likely to change hands, which explains why the shares are trading above the Baugur/Tchenguiz mooted bid price. Suitors are attracted by its property portfolio and cash flow, as well as its push into the fast-growing convenience store market.

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