Superquinn sale plans halted after Musgrave bid withdrawn
Musgrave pulls out of talks to buy the Irish supermarket chain and withdraws €150 million offer
10 October 2008
Musgrave is no longer interested in buying the supermarket chain Superquinn, a source close to the group has confirmed to ShelfLife. Having reportedly been the key bidder for the business, among six others in talks with handlers Goldman Sachs, it has withdrawn its offer of €150 million on the basis that the deal “didn’t make good business sense” for the company.
Aside from falling around €100 million short of the asking price from Superquinn owners Select Retail Holdings, Musgrave had problems with the terms of the deal, which would not allow the retailers to own the sites of the acquired supermarkets. This imposition proved to be a deal-breaker for the wholesale group, as it is incongruous with its business which centres on partnership with independent retailers.
Although it is believed that KPMG is currently drafting a due diligence report for Superquinn, it is now doubtful that any promising offers will be forthcoming, according to a source close to the proceedings. Select Retail Holdings has valued the business at approx €250 million, partly on the basis of annualised pre-tax earnings of €10 million to €15 million. However, possible buyers may find this to be poor value, particularly in the current economic climate, and it is suspected that “there won’t be anyone there” when the owners come to meet bidders, the inside source says.
In Ireland Superquinn executives still insist that reports of the company being for sale are “of no substance”. At the recent launch of Superquinn’s Christmas range, which comprises some 150 own brand lines, 90% sourced in Ireland, CEO Simon Burke said the retailer is still committed to returning the company to its former high-end position in the Irish market.
At the launch, Superquinn’s trading director, James Wilson, admitted that its owners are “very stressed out” this year, but that the team behind the brand have nothing but expansion and further profit growth in mind for the present and future, commenting that its new Ranelagh store has exceeded expectations. Burke has said the company intends to expand its portfolio from 24 to 35 stores.