M&S scraps US supermarkets sale
Friday 15 August 2003
Marks & Spencer has abandoned its attempts to offload its US supermarkets business more than two years after first putting it on the market.
The high street retailer said the latest round of talks to sell Kings Super Markets had broken down after the buyer - known to be Gristede's Foods, a New York-based rival - failed to raise the £75m-plus asking price.
It is the third time M&S has been forced to shelve the sale of its last US asset because prospective buyers have been unable to secure financial backing - with two of the three problems involving Gristede's. Roger Holmes, the group's chief executive, said: "In the current US climate it has not been possible for interested parties to raise sufficient funds to purchase Kings at what we perceive to be a fair price." He said M&S would hang on to the chain and try to revive its profitability.
The group's failure to sell Kings highlights the differing appetites for supermarket stores on either side of the Atlantic. In the UK, four supermarket groups are falling over each other to acquire Safeway in a deal worth more than £3bn while M&S cannot offload 27 sites in New York and New Jersey. Analysts said M&S had only put the sale on hold until debt and equity markets in the US picked up. Kings has a net book value of £65m, prompting analysts at JP Morgan to suggest M&S would seek a minimum sale tag of £75m. David Stoddart, at Teather & Greenwood, said: "In the context of the size of their balance sheet, the failure to sell the business is immaterial."
Mr Holmes added: "Although Kings is not central to our strategy, we believe that maximising shareholder value will be achieved by working with the senior management team to develop the business and drive financial performance."
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