Big Food Group says it would back 110p bid

Big Food Group, the owner of the high street supermarket Iceland, yesterday said it would recommend a 110p-a-share takeover of the group from the Icelandic group, Baugur, if a firm offer is made.

Big Food Group, the owner of the high street supermarket Iceland, yesterday said it would recommend a 110p-a-share takeover of the group from the Icelandic group, Baugur, if a firm offer is made.

"The board confirms that if an offer at this price were to be made today, it would, subject to, inter alia, other terms and conditions, recommend it to shareholders," a statement from Big Food Group said yesterday.

It was forced to issue the statement by the Takeover Panel, which had asked Big Food Group to clarify its position on its current talks with Baugur.

Baugur, which owns a 22 per cent stake in Big Food Group, came forward with the prospect of a potential 110p-a-share offer last week. On Friday, Big Food Group said that it had opened up its books to Baugur to allow it to conduct due diligence before proceeding with an offer.

Baugur, together with a group of unidentified "investment partners", said that its approach was at only a preliminary stage, and that there was no certainty an offer would be forthcoming.

There has been speculation that Baugur, which has been an investor in Big Food Group for two years and has a significant profit on its shareholding, may reduce its offer if it discovers a slide in sales. The group said on Friday that in the 10 weeks up to 10 September, sales had fallen 3.2 per cent.

Big Food Group also has a £192m pension deficit and £250m of debt. Baugur said in a statement on Friday that it reserved the right to make a lower offer if it has agreement from the board of Big Food Group.

But some other shareholders have already expressed concerns that an offer of a 110p-a-share bid is too low, which could threaten the success of the deal.