Liberty near £40m sale to BlueGem Capital

Owner of landmark London store confirms it has received bid approaches
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The Independent Online

Liberty, the 135-year-old London department store, is set to be bought by an investment fund for up to £40m. Marco Capello, the former managing director of Merrill Lynch Global Private Equity, is thought to be close to buying the Liberty business through his investment fund BlueGem Capital Partners.

Liberty's confirmed it had received takeover "approaches" yesterday after months of speculation about the company. Earlier this month it said it was considering the sale of the freehold of its 125,000 sq ft mock Tudor building on Great Marlborough Street.

The retailer's shares rose 7 per cent to 275p on the news, valuing it at £68.5m.

It is understood that Mr Capello could acquire the business before the end of next month. By then Liberty is also expected to have completed a separate sale and leaseback deal on the shop for in excess of £40m.

The luxury investor Robert Bensoussan and the global supplier Li & Fung are also among those to have expressed an interest in bidding for Liberty, according to the fashion industry magazine Drapers. The magazine reported that Mr Capello had significantly outbid the competition and plans to buy Liberty for as much as £40m. Liberty also creates and wholesales fabric to designers. BlueGem Capital Partners did not return calls yesterday.

Last June, the property firm MWB, which owns 68 per cent of the retailer, in effect put Liberty up for sale by hiring Cavendish Corporate Finance and Global Leisure as advisers.

The retailer told the Stock Exchange yesterday: "The board of Liberty confirms it had received approaches which may or may not lead to an offer being made for the company."

Liberty said it had been "examining and assessing a range of options and initiatives" that would enable it to build upon its success since the launch of its Renaissance of Liberty strategy, including a refurbishment of the London store, in February 2009. "This has included seeking investors who could bring capital and expertise to help develop and grow the business both within the UK and internationally," Liberty added.

In its trading statement in January, Liberty reported a 20 per cent rise in overall revenues for the year to December 2009, driven by its beauty and menswear departments. The flagship London store saw sales rise 16 per cent on the previous year. Yesterday, Liberty said: "Trading has continued to benefit from the Renaissance of the Regent Street flagship store which drove footfall and market share over the remainder of the year and has continued during 2010 to date."

For the six months to 30 June 2009, Liberty delivered underlying earnings of £30,000, after posting a £2.7m loss for the same period a year ago.

Arthur Liberty founded the brand in 1875. The London store was built using timbers from two former Royal Navy ships, HMS Impregnable and HMS Hindustan, although the mock Tudor facade was added later.