MFI edges closer to completing sale

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MFI emphasised that a sale of its struggling retail arm could have a "material bearing on shareholder value", as it inched closer yesterday to offloading the chain.

The prospective buyer is Merchant Equity Partners, a private equity firm launched recently by an ex-Deutsche Group banker.

An outcome to the long-running sale saga is thought to be just days away, although MFI warned that "a number of significant issues remain outstanding".

The retailer said it still had "other options" for its retail business, which has been one of the most high-profile casualties of the recent high street downturn. A sale will leave the group with its trade business, Howdens Joinery.

The prospect of a deal nudged MFI shares 2p higher to 89.5p.

However, Christian Koefoed-Nielsen, a retail analyst at Panmure Gordon, said: "MFI's recovery and repositioning is going to be a very long haul. The proposed disposal of the retail division raises as many questions as it answers."

MFI is expected to sell its 200-store chain to MEP for a nominal sum of £1. The deal will be debt-free and carry no pension liabilities. MFI will also help to fund a joint financing package to help secure the future of the kitchen-to-bathroom maker.

MFI said: "The terms currently under discussion include nominal consideration and cash contributions from MFI and the purchaser, as well as other features which could have a material bearing on shareholder value."

MEP, which was started by Henry Jackson to acquire distressed retail businesses, beat off competition from Apax Partners and Argyll Partners to put itself in pole position to acquire the retail chain.

Gary Favell, the former chief executive of Wyevale Garden Centres, has been lined up to run the chain.