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Saturday 11th February 2012

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Retail round-up: The Sunday papers

Radice set to exit M&S; venture capitalist KKR stalking Matalan

The Observer

Vittorio Radice, the man whose retail flair was supposed to revive M&S, will follow Roger Holmes and Luc Vandevelde out of the door within days. He was promoted only five months ago to a post regarded as second only to Holmes's and given a brief to revive the core clothing line in addition to the home division and the look of the 380 stores. His £485,000-a-year role was supposed to complement Holmes's strategic skills. Now that Stuart Rose is chief executive, M&S non-executive directors and shareholders believe they have a man 'steeped in retail' and Radice's position is understood to have become redundant.

Philip Green is ready to raise his bid for Marks & Spencer by at least £1bn as part of a carefully planned campaign, designed to attract support from the company's powerful City investors. But he could soon face competition from a 'club' of venture capitalists spearheaded by KKR and the Carlysle Group, according to private equity sources. Far from deciding to throw in the towel, Green is preparing a revised bid for M&S that could be worth up to £10bn or 425p a share.

Independent on Sunday

K ohlberg 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 5m 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.

HBOS has acted to defend its chairman, Lord Stevenson of Coddenham, against accusations that he has compromised his independence by agreeing to be a non-executive director in Philip Green's bid vehicle. City sources said Lord Stevenson could not be independent because HBOS is not only lending money to Green's vehicle, Revival Acquisitions, but will invest over £150m in shares in the company. A spokesman for HBOS said: "Business life is rarely conflict free, and over his long city career Dennis has shown he is able to manage these conflicts."

Philip Green may drop his £8bn pursuit of Marks & Spencer after institutional investors rejected his plan for an equity 'stub' as part of his conditional bid. The Monaco-based owner of Bhs and Arcadia is this weekend considering his position and is expected to make a further statement this week. He is expected either to make an all-cash offer, valuing M&S at £9bn, or walk away.

The Sunday Telegraph

Stuart Rose has disclosed that he was an 'insider' in Philip Green's £7bn-plus bid plans, which he had known about since May 12. Rose admitted that he had a further conversation about working with Green on Friday, May 28, 24 hours before he received a formal offer from M&S. Rose said that Green first informed him of his plans to acquire M&S on May 12. Rose signed a confidentiality agreement preventing him from passing on this information. Green has confirmed the meeting took place.

Two former directors of T&S Stores, the convenience store chain, will this week launch a last-ditch rival bid for Londis, the retailer which has agreed a takeover from Musgrave, the Irish group. Lancelot, the bidding vehicle led by Geoff Purdy and David Crellin, will make a formal offer after the Londis board rebuffed various approaches over the course of the year.

Rip Curl, the Australian surfwear brand, is aiming to make a splash by opening five stores in the UK over the next 18 months. The first store will open in Newquay, the Cornish town which is the centre of the British surfing scene, in early 2005. A central London flagship store is also planned. Rip Curl has 47 stores worldwide, but currently only sells its clothes through other retailers in the UK.

The Sunday Times

Philip Green looks likely to return with an all-cash offer for Marks & Spencer. Green and his advisers are this weekend considering ditching their initial plan to give investors a 25 per cent equity interest in the bid vehicle. It is understood that a cash bid could be pitched at a premium to the current share price of 357½p, at which the group is valued at £8 billion.

Britain*#*8217;s biggest food companies are to be told by the government to pay an 'anti-obesity' levy to fund new sports centres or face punitive laws restricting advertising, marketing and labelling. Firms such as McDonald*#*8217;s, Walkers and Cadbury Schweppes are to be asked to contribute tens of millions of pounds towards the sports facilities. The government is set to provide £1m for the scheme for every £3m pledged by the food industry. It will be used to build sports centres, gyms, football pitches and tennis courts.

The Mail on Sunday

Philip Green will target Marks & Spencer's big American shareholders this week with a charm offensive in an attempt to rescue his foundering bid plans for the high street giant. Just three investors - Brandes, Capital Group and Artisan, who between them hold more than 22 per cent of M&S *#*8211; are to be the focus of attempts by the M&S team to put pressure on M&S.

The Takeover Panel was involved in last minute talks with private equity firm CVC Partners and investment firm Citigroup, 24 hours before the floatation of Halfords. It emerged that together they would hold more than 39.9 per cent of shares. The Panel was considering whether CVC and Citigroup, through subsidiary Citicorp Capital Investors were acting together *#*8211; known in the City as 'in concert' *#*8211; and had breached the takeover code.

A £60m rival bid for convenience stores group Londis will be tabled on Monday by Lancelot, run by former directors of T&S stores. Lancelot will offer Londis shopkeeper shareholders £12,400 per share plus a 60 per cent stake in the ongoing business. Geoff Purdy said that Musgrave has failed to give Londis shareholders a stake in the future prosperity of the business.

The Sunday Express

Furniture group MFI could become the latest target of the public-to-private trend sweeping the retail sector as venture capitalists weigh up £500m bids for its UK retail business. Cinven, CVC and Texas Pacific Group are among the private-equity firms thought to be running the slide-rule over the division, valued at more than £400m.

Philip Green will this week sound out investors in Marks & Spencer about plans for an all-cash bid for the ailing high street group. Green will embark on a tour of major shareholders, who include Brandes Investment Partners, Isis Investment Management and Legal & General Asset Management, to convince them that his fresh plan is worth serious consideration.

The stakes in the battle for Londis will be raised this week when bid vehicle Lancelot waives due diligence in favour of making a £60m offer directly to shareholders. The company, headed by former T&S stores director Geoff Purdy and backed by Nordic bank Kaupthing, is understood to be frustrated by its failure to gain access to information held by KPMG Corporate Finance, which is overseeing the Londis sale.

Icelandic retail group Baugur, owner of the Oasis fashion chain, is thought to be considering an offer for boutique fashion group Phase Eight if its attempt to buy Karen Millen fails. Phase Eight is understood to have hired Cavendish Corporate Finance to review strategic options for the business, which is 52 per cent owned by its founder Patsy Seddon and her partner Peter Urquhart.

Mobile phone operator Cauldwell Communications is planning to enter the UK broadband market later this year. Sources close to the firm, owned by billionaire John Cauldwell, say the group has been working on the move for several months. The company owns mobile phone business Phones4U and fixed-line operator Homecall.

The Business

Philip Green asked his rival Stuart Rose to join his takeover bid for Marks & Spencer with the promise of a stake in the new company. Rose saw Green last Friday outside M&S's Baker Street headquarters, according to sources at the retailer. They said Green told Rose: "You could have made £250m if you'd come with me."

French retail group Carrefour could be forced to downgrade its full-year sales targets in a move set to heap more pressure on chairman and chief executive Daniel Bernard. In a briefing note, JP Morgan analyst Jame Vazquez estimated that the group would fail to deliver its margin targets. The pressure on sales comes amid a move by the French government to force down retail prices, against a background of rising supplier costs.

Furniture retailer and home improvements retailer MFI is being circled by private equity houses including CVC Capital Partners, Permira, and Cinven, after reports last week of a £1.2bn management buyout plan. City sources say the groups may seek a buyout of the struggling UK retail business, allowing the listed company to unlock value from its joinery business, Howdens, which outperforms the core business.

Tagged as: Marks & Spencer | Matalan | Londis | Rip Curl | Baugur | Oasis | Phase Eight | Phones4U | Carrefour

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