Iceland owner gets new investor - from Iceland
Group, owner of the Iceland supermarket chain, are from Iceland
themselves has nothing to do with the purchase. It is all about
investing in an undervalued company, Baugur said.
Shares in struggling UK company Big Food Group rocketed by more than 50 per cent yesterday following the news that the Icelandic company Baugur had taken a strategic 15 per cent stake in the firm.
The move was also a godsend for headline writers, given that Big Food's main business is the Iceland food retail chain, but Baugur's interest in the company had much more to do than an a mere affinity with the name.
Baugur said that it believed the stock market had seriously undervalued Big Food in recent months - although the company's continued profit warnings and the failure to turn things around at Iceland have not helped boost analysts' confidence - and that it wanted to be a "supportive investor" in Big Food Group as it tries to turn itself around.
A spokesman for the company ruled out any immediate bid for the business as a whole, although this could still be a possibility in the longer term.
The company's determination to become a major investor in Big Food was clearly shown by its decision to pay 40 pence (€0.64) per share for the Big Food shares - some 65 per cent above their trading price earlier in the day.
Baugur has extensive retail operations in Scandinavia, but they are all clothes retailers such as Top Shop and Miss Selfridge, so the rationale behind the Big Food stake remains something of a mystery.
Big Food's management is not asking too many questions, however, and has contented itself with welcoming the new shareholder. "Baugur has recognised the inherent value within The Big Food Group and has taken the opportunity to buy a significant stake in the company. We look forward to working with them as a supportive shareholder," said chief executive Bill Grimsey.
