Tchenguiz joins queue of suitors for Somerfield

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The Independent Online

Shares in Somerfield jumped yesterday at the prospect of a £1.5bn bidding war after the supermarket group revealed suitors were queuing up to buy the company.

Shares in Somerfield jumped yesterday at the prospect of a £1.5bn bidding war after the supermarket group revealed suitors were queuing up to buy the company.

Robert Tchenguiz, the property developer, is behind one of the approaches, worth 205p a share, and Ian and Richard Livingstone, who control London and Regional Properties, are behind the other.

Analysts said the fresh proposals could entice Baugur, the Icelandic retailer also stalking Somerfield, to raise its 190p-a-share offer, which the supermarket group board's rejected. James Collins, at ABN Amro, said: "I think the store estate could be worth up to three pounds per share, and that is what is driving interest." Somerfield's shares rose 6 per cent to 207p.

Mr Tchenguiz, who heads Rotch Property Group, has teamed up with Apax Partners, a private equity house which specialises in retail, and Barclays Capital. The property tycoon began a relationship with Somerfield in October, via a deal in which he acquired 51 former Safeway stores from Wm Morrison and leased them to Somerfield. He formed a joint venture with Barclays Capital to buy the properties.

In a surprise move, the Office of Fair Trading ordered an inquiry into the deal because it felt Somerfield's purchase of the store package raised competition issues in 22 instances. The Competition Commission has until September to report back but it is thought that Mr Tchenguiz's consortium will press ahead with a conditional proposal before the outcome of the competition investigation is known.

The Livingstones, who are worth about £180m, are thought to have offered 190p a share for Somerfield. They have teamed up with Nomura, the Japanese investment bank.

Somerfield declined to comment yesterday, beyond the statement it issued confirming it had "recently received further proposals regarding possible cash offers for the company". Its board will meet after the Easter weekend to discuss its response. The supermarket chain rejected Baugur's approach, which was subject to conditions including successful due diligence, funding and agreement with its target's pension scheme trustees, because it was not confident that a formal offer would follow "at an appropriate level".

Somerfield said it had not sought the consent of the prospective bidders to issue its statement, adding: "There can be no certainty that an offer will be made or as to the terms on which any offer would be made."

Steve Back, Somerfield's chief executive, is keen to pursue his own strategy for the group, which has focused on the convenience store market. The group recently bought 140 Texaco forecourt stores in an attempt to bolster its position in the lucrative "top-up" shopping market.

This is the second time in two years that Somerfield has been the subject of bid interest. In 2003, it rejected a £594m bid from John Lovering and Bob Mackenzie, the retail entrepreneurs. Three years ago, J Sainsbury consideredacquiring the group.

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