Hargreaves to take Matalan private in £817m deal

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The Independent Online

The discount clothing retailer Matalan has agreed to be taken private by its founder and chairman John Hargreaves in an £817m deal.

Mr Hargreaves already controls 53.5 per cent of Matalan together with his family and has agreed to buy the rest for 200p a share. He said: "The company's recent difficulties have led me to believe that Matalan would be better off back in the private ownership of the Hargreaves family. This will enable us to make the necessary changes to the business and restore the original values and ethos that enabled the company to grow."

The deal will be funded from a £408m debt facility arranged by the Icelandic bank Kaupthing. Stuart McKee, a partner at PricewaterhouseCoopers who advised Mr Hargreaves, said he introduced Kaupthing to him two weeks ago and it came up with a better funding package than Barclays Capital, which had previously been working on the deal.

The cash deal was recommended by the retailer's independent directors, including the Carpetright founder Lord Harris, and is set to be completed over the next three months via a scheme of arrangement.

Geoff Brady, a senior independent director, said the offer represented good value. "We are happy in the circumstances of having a controlling shareholder. There was no prospect of any other bids coming in against his."

He noted the shares climbed to only 177p on news of the bid in August, indicating "the market didn't really believe we would be able to hold him to the [200p] price".

Alistair McGeorge, the former head of Littlewoods, is to succeed John King as the chief executive of Matalan, who had already announced he would stand down at the end of the year.

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