Woolies rejects Apax price range as `unacceptable'

WOOLWORTHS REFUSED to grant Apax Partners access to its books yesterday after the private equity group pitched a lowball takeover proposal worth between 50 to 55p per share.

The retailer, which rushed out its post-Christmas trading statement after sales stalled, said the indicative proposal was laced with pre-conditions. It dismissed the offer just hours after receiving it on the grounds that the range indicated failed to provide "acceptable value or certainty" to warrant further talks. Apax's proposed range valued its target at between pounds 718m and pounds 790m.

Shares in Woolworths, which updated the City after the stock market closed yesterday, reached 48p - well below the 60p-a-share level many analysts thought a bidder would have to pay. Before Christmas, its shares traded at about 46p.

Analysts said Woolworths' rejection could flush out other bidders although few observers could see the rationale for a private equity bid for a company that lacks a freehold estate. Asda and Tesco are among the mooted trade buyers.

Nick Bubb, at Evolution Securities, said: "Woolworths' management was obviously of the view that the company is worth more. So either they have got to justify that with a punchy recovery plan or they must think there is another party waiting to come in. I still think it is in play."

Richard Ratner, at Seymour Pierce, said: "The company is now ... in play. However, the pressure is now on the management to perform."

It took Woolworths' board, headed by Gerald Corbett, just one meeting to reject Apax's proposal, which it received on Monday. The company said: "The board, with its advisers, has considered this indicative proposal carefully. It has concluded that the range indicated does not provide acceptable value or certainty to justify entering detailed discussions with Apax."

The private equity group demanded full access to Woolworths' financial and trading information as part of its pre-conditions. Apax declined to comment on its intentions, but it has ruled out making a hostile approach. It had lined up Robert Dyas' former executive team, led by Robert Pedder and Brent Wilkinson, to head its bid approach.

Woolworths is anxious to avoid repeating the upheaval that preceded its demerger in 2001, when Kingfisher attempted to find a buyer. Privately, it feels it has suffered unduly from being the first retailer to heed the City regulator's edict that companies had to confess promptly to poor sales over Christmas. Its shares lost about one-fifth of their value after it brought forward its trading statement.

Although Trevor Bish-Jones, the chief executive, has improved operating margins, he has failed to grow the top line. Underlying sales over Christmas were flat.

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