Nectar founder to net 161m windfall from sale

Sir Keith Mills, founder of the Nectar card programme, set himself up for a 161m payday yesterday after agreeing to sell the customer loyalty company he started five years ago.

Aeroplan, operator of Air Canada's frequent-flier programme, agreed to pay 350m in cash for Loyalty Management Group, in which Sir Keith holds a 46 per cent stake.

Most of the company's management, including the chief executive Alex Moorhead, will stay at LMG, though Sir Keith will step down as chairman.

Already a millionaire from his previous creation the Air Miles loyalty scheme Sir Keith may throw some of his gains at his effort to establish Britain's team for the America's Cup yacht race. He was also instrumental in London's winning bid for the 2012 Olympics.

Warburg Pincus, the private equity firm that granted 25m in start-up funding for the business five years ago, will pocket about 117m for its one-third stake, with the remainder going to certain top managers who held the balance of the private company's shares.

Nectar runs loyalty programmes with partners including J Sainsbury, BP, Barclaycard, and Debenhams.

Aeroplan agreed to put up an additional 18m for working capital but could reduce the headline price by as much as 31.6m, depending on the outcome of Value Added Tax litigation against LMG.

Rupert Duchesne, the chief executive of Aeroplan, said the companies would continue to operate separately and that there was little scope to extract synergies form the combination. Rather, the acquisition the Canadian company's first is part of Aeroplan's strategy to craft the first global customer loyalty company. "This acquisition is an important milestone in the development of Aeroplan," he said.

The combined group will also look to expand abroad, principally in Asia and South America. He called the US, the world's largest retail market, "a collection of regional economies" that is too difficult to enter. He added: "The world is littered with the bodies of companies that tried to launch big coalition programmes in the US. That will not be the priority for us."