Walker vows to fight off bids as Iceland posts record results
Saturday 11 June 2011
Iceland foods posted record results yesterday, turning up the heat on its rivals which are shortly expected to kick off a multibillion pound battle for control of the supermarket chain.
Yet chief executive Malcolm Walker vowed to keep the firm he salvaged from the brink of bankruptcy independent.
The future of the frozen food specialist became uncertain when it emerged that the winding-up committee of the collapsed Icelandic bank Landsbanki had put its 67 per cent stake in Iceland on the market. Yet it has not affected performance, as the group posted its sixth consecutive year of growth yesterday.
Some of the biggest names in the industry are looking at the group, with both Asda and Morrisons believed to have appointed advisers to run a slide rule over a bid. The bank's stake has been valued between £1.5bn and £2bn.
Mr Walker, who returned to the group in 2005, wants to take full control, however. He said: "Our own objective is to ensure that Iceland has a strong, prosperous and independent future." He, along with other managers, owns 23 per cent of the supermarket chain.
He admitted the sale process for Landsbanki's stake in the company had created a "period of uncertainty," before adding: "My colleagues and I will work constructively to bring this process to a satisfactory conclusion."
Mr Walker, who founded the group in 1970, said that during his recent stint the standards of the store, its products and staff morale had been "transformed". Yesterday the supermarket's holding company posted a 15 per cent rise in pre-tax profits to £156m for the year to 25 March, on sales of £3.2bn. It added that the group was "effectively debt-free" at the end of its year.
"This is the sixth consecutive year of growth that my colleagues and I have delivered since we returned to manage the business," Mr Walker said.
Natalie Berg, the global research director at Planet Retail, said: "The results are impressive. In a time when household budgets are squeezed, Iceland is seen as good value."
The company ended its financial year with 20 more stores than it started with, bringing the total to 796. It also boasted of creating an additional 1,500 jobs. The company plans to open a further 15 stores this year
Mr Walker backed the firm as being the "main driver of innovation in the UK frozen food market, launching more than 200 new products during the last 12 months".
The Resolution Committee of Landsbanki appointed Bank of America Merrill Lynch and UBS to run the sale of the stake. It emerged last month that Mr Walker has meet the committee.
He approached with a £1bn offer for the stake last year financed by bank funding, which is still on the table. Mr Walker has pre-emption rights and can step in and match any bid that is made. Another nationalised Icelandic bank, Glitnir, owns the remaining 10 per cent of Iceland.
Ms Berg said: "All of the supermarkets will have had a look, opportunities like this don't come up very often." She continued that yesterday's results could drive up the price of the stake before adding: "Malcolm Walker will try to fight this off. Iceland still has plenty of growth potential."
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