Carpetright joins the queue as its thoughts turn to a Dreams bid
The floor coverings retailer Carpetright has become the latest suitor to express an interest in Dreams, the troubled beds chain that is up for sale.
Carpetright, whose founder and chairman is Lord Harris, has asked to see the sales memorandum on debt-laden Dreams from Ernst & Young, the accountancy firm handling the auction.
Royal Bank of Scotland, the retailer's main lender, put the 270-store chain up for sale before Christmas and Ernst & Young has received more than 20 expressions of interest ahead of first-round bids in early February.
Carpetright, which also sells beds, is looking at Dreams' best stores. Sources have suggested a full-blown takeover bid is unlikely.
Dreams, which also manufactures beds in the West Midlands, has a leading 23 per cent share of the beds market, also populated by Argos, Ikea, John Lewis, Bensons for Beds and hordes of small independents.
Mike Clare, the retailer's founder, sold Dreams, pictured, to the private-equity firm Exponent for £222m in 2008. Since then it has struggled with its debt burden of £40m and the consumer downturn, although it saw a 7 per cent rise in sales over Christmas.
Mr Clare, who is being advised by the restructuring firm Zolfo Cooper, is plotting to buy back Dreams. He is speaking to unknown private-equity houses about providing funding.
Other suitors for Dreams include Sun European Partners, Steinhoff International, the owner of Harveys and Bensons for Beds, and the beds firm Silentnight, which is backed by HIG Europe. Steinhoff would probably be limited to buying about 50 stores on competition grounds.
Some industry experts reckon Dreams may have to be radically restructured to have fewer stores and less debt. However, other sources believe this may not be necessary, citing the damaging impact this would have on its relationship with suppliers.
Perhaps more significantly, it also relies heavily on customers paying deposits on beds, which can take up to five weeks for delivery, so a restructuring could drive shoppers away.
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