Big Food agrees to cut-price offer to seal Baugur takeover

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The Independent Online

The board of Big Food Group, the owner of the Iceland chain, agreed yesterday to a £52m reduction in the value of the proposed bid from the Icelandic group Baugur.

The board of Big Food Group, the owner of the Iceland chain, agreed yesterday to a £52m reduction in the value of the proposed bid from the Icelandic group Baugur.

Baugur's revised offer values the food retailer at £326m - or 95p per share - down from the £378m it signalled when it first approached the company three months ago.

Shares in Big Food rose 3.5p to 92.5p on relief that Baugur had not cut its offer further. Sales at the company, which has issued three profit warnings this year, have tumbled amid intensifying competition from rivals such as Tesco.

Big Food said a final offer still hinged on Baugur and its investment partners' ability to raise financing. The acquisitive Icelanders are understood to have teamed up with West Coast Capital, Tom Hunter's investment vehicle, and Malcolm Walker, who ran Iceland until he quit after a profit warning.

Bill Grimsey, Big Food's chief executive, predicted investors would welcome the reduced offer. "I would expect shareholders to react positively to this ... and take 95p cash in the hand, although there's no certainty that an offer will be forthcoming," he said.

Rhys Williams, a retail analyst at Seymour Pierce, said: "We believe that 95p is a fair price and should be accepted by shareholders since the future is far from bright for the group. We would advise clients either to get out, or accept the offer if it does come."

Big Food recently revealed that like-for-like sales have continued to plummet, falling 3.1 per cent in the five weeks to 5 November.

It is still not clear whether Mr Grimsey will stay on if Baugur's bid succeeds. Nor is it known whether Baugur will keep the company, which includes the Booker cash-and-carry business, intact.

Yesterday, Big Food said it would, "subject, inter alia, to agreement on other terms and conditions, recommend an offer of 95p per share to shareholders". It said any offer would be announced before 17 December.

Baugur is becoming one of the UK's most significant private retail investors. It owns retailers ranging from the London toy store Hamleys, to Mosaic, the Oasis-to-Karen Millen womenswear group. Last month it bought MK One, a discount clothing chain.

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