Iceland to be taken back to its roots

Malcolm Walker said yesterday he was determined to take on the supermarket giants when he resumes control of the Iceland chain and returns it to its frozen food roots.

Malcolm Walker said yesterday he was determined to take on the supermarket giants when he resumes control of the Iceland chain and returns it to its frozen food roots.

"Iceland should be in frozen foods and not in its present convenience store approach," he said as he was being installed back in the driving seat at the business he founded.

Iceland is part of Big Food Group (BFG), which is being taken private as part of an agreed £326m bid being announced today by Giant TopCo, a consortium including Baugur, the Icelandic retailer; Kevin Stanford, the founder of the Karen Millen fashion chain; and Tom Hunter, the Sports Division retail millionaire.

It is a complicated deal worth 95p a share, compared with the 92.5p at which BFG shares closed last Friday. Its shares have been as high as 180p this year.

The purchase will have to be voted on by shareholders, and is then being put into effect through a scheme of arrangement, which requires court approval. That is likely to be conferred by the end of next month.

Institutional investors controlling about 20 per cent of Big Food's shares have pledged their support for the deal. Their holdings will in effect have a 25 per cent say, because Baugur cannot vote its 22 per cent stake.

Giant TopCo is to inject a total of £49m into BFG's pension scheme, to reduce a £192m deficit. A £35m upfront payment will be followed by instalments of more than £4m a year for three years.

But when the BFG deal has gone through, the Iceland chain will be sold to a separate consortium, while Baugur and Mr Hunter will buy most of the group's property for more than £210m. That will leave BFG with Woodward Foodservice and Booker cash and carry.