American hawk circles Matalan as it struggles to regain its lustre

Kohlberg Kravis Roberts, the aggressive US buyout firm, is considering a bid for Matalan, the discount retailer.

Kohlberg Kravis Roberts, the aggressive US buyout firm, is considering a bid for Matalan, the discount retailer.

Executives from what is one of the most feared private equity companies have spent weeks running the slide rule over the company, according to well-placed sources. KKR, which has also been linked with a bid for Sainsbury's and Marks & Spencer, is interested in breaking up Matalan, which has over 5 million square feet of out-of-town retail space.

KKR refused to comment. If it decides to bid, it will have to offer at least £1bn and win support of Matalan's chairman, John Hargreaves. The founder of the business controls 52 per cent of Matalan's shares. He has previously indicated he's not prepared to sell, but, some believe, at the age of 60, he may now be tempted.

Matalan was the darling of the retail sector four years ago. But mistakes with its ranges, a botched marketing strategy and competition from Asda and Tesco clothing have hammered it.

The company appointed John King as its chief executive last year, and he is tackling some of the problems.

Stockbroker Evolution Beeson Gregory said in a recent report: "We know that Matalan still has much to prove, but if somebody wants to bid, they'd better get on with it, because this company is definitely turning. The vibes about May trading were good."