Interflora chief seeks backing for sale with offer of windfalls

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The Independent Online

The board of Interflora, the florist network, plans to sell the 81-year-old company to a private equity firm, giving its members a cash windfall and a continuing stake in the newly incorporated company.

The last time Interflora explored the possibility of changing its structure, seven years ago, the board was ousted after a rebellion among the 1,850 florists who own the business. Interflora's current chief executive, Steve Richards, is spending the next few months consulting members over a plan put forward by his adviser, PricewaterhouseCoopers, which would see the business demutualised and sold in a venture capital buyout, producing cash windfalls.

If Mr Richards gets the go ahead, he will spend the summer finding a buyer for 75 per cent of the business. Management is expected to take a stake and a stock market flotation could follow the incorporation.

Interflora, which can deliver flowers within three hours throughout the UK, is facing increased competition from supermarkets, which are able to undercut its prices. Profitability has been stagnant at the group for some time, at about £2m on turnover of £20m, and the board is keen to modernise the business. By becoming a private company, Mr Richards believes the business will get a boost to its marketing and IT systems.

"Our current membership structure does not make for the most dynamic of business strategies. It has worked in the past, but we are now facing so much more competition from supermarkets that we have to find a better way of running the business," Mr Richards said yesterday. "If we find an external investor, it would create a structure that could improve and invigorate the brand without using members' funds.

Mr Richards is keen to allay fears that management is interested only in its own enrichment. Member shopkeepers of the Londis store chain recently blocked a takeover that would have handed four executives multimillion pound pay awards.

"This is not a fait accompli. We do want to talk to members and the plan is at an early stage. It is not about management lining their own pockets," he said. If a bidder was found, 75 per cent of members would have to agree to the takeover.