Somerfield ousts chief executive Simons as takeover talks collapse

Somerfield, the struggling supermarket group, announced the abrupt departure of David Simons as chief executive yesterday as it revealed that talks that could have led to a takeover of the business had collapsed.

Mr Simons, 53, who has been chief executive since 1993 was told of the decision yesterday morning. He will be replaced by Alan Smith, a former Kingfisher director who is currently the chief executive of Punch Taverns. The company said it expects to name a new executive chairman soon to replace Louise Patten.

Lady Patten, the wife of the former Conservative minister John Patten, said yesterday: "The issue was a relatively recent one with the non-executives becoming increasingly concerned about the performance of the business."

Mr Simons will be paid compensation equivalent to 12 months' salary, which was £460,000 last year. He also has a substantial share option package, though this is worthless due to the collapse in the share price. Mr Smith's terms were not disclosed, though it is believed Somerfield paid Punch a small "transfer fee" for his services.

Somerfield shares fell 4.75p to 57.25p yesterday, though analysts expressed surprise that the decline was not sharper: Philip Dorgan, an analyst at WestLB Panmure said: "Somerfield is likely to fall into loss next year. It has an unattractive store base and the market is getting tougher. The shares have further to fall."

Andrew Fowler, a supermarket analyst at Morgan Stanley Dean Witter, added: "It is a very brave person who owns these shares on the basis that Somerfield will be able to successfully trade its way out of this corner. It will be a Herculean task."

Somerfield issued a statement earlier this month that it was in talks with several parties that could lead to a takeover. The bidders included Apollo, a venture capital group that was linked to Mr Simons. With the board reportedly split on the merit of taking Somerfield private and Mr Simons' relationship with the finance director Martin Gatto deteriorating, a committee of non-executives was formed to study the options.

With none of the talks looking likely to lead to a credible offer, Somerfield decided to terminate all talks.

Mr Simons' departure from Somerfield marks the end of a volatile period in charge of the group. When he joined from Storehouse in 1993 the business, then called Isosceles was weighed down by more than £1bn of debt following the buyout of the Gateway Foodmarkets stores. With the name changed to Somerfield, Mr Simons succeeded in floating the company on the stock market in 1996, though the price had to be cut twice to get the issue away.

The shares had a brief surge after the company's merger with fellow struggler Kwik Save two years' ago. But it soon became apparent that the deal had been ill-judged. With trading deteriorating, the shares plunged and Mr Simons has been desperately seeking another merger partner ever since.

Somerfield sold 46 of its largest stores for £309m last month and said it was planning to concentrate on the convenience store market. But it has yet to sell 350 Kwik Save stores which have been performing poorly.

One analyst said yesterday: "Does this business have a future? I don't think so. It was put together from a load of bits and it will end up as a load of bits."

Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Guru Careers: FX Trader / Risk Manager

Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map