Londis puts itself up for sale

At an initial meeting on Tuesday, consultants KPMG outlined a range of options for Londis, including floatation and maintaining the status quo, and while most of these possibilities were rejected, the board failed to make a final decision on what course of action to take.

But with several potential buyers for the group already waiting in the wings, the decision to put the group up for sale was almost inevitable, and yesterday's meeting was a virtual formality.

"After careful deliberation, the board has unanimously decided to accept KPMG's recommendation that it would be in the best interests of all the shareholders of Londis to take advantage of its current position of strength,"​ Londis said in a statement.

KPMG will now begin negotiations with a number of interested parties with a view to drawing up a shortlist of candidates.

The consultants were originally called in after a £40 million bid for Londis from Irish store operator Musgrave back in December fell through amid a storm of protest from Londis shareholders. The bid would have given the lion's share of the cash to Londis' directors, leaving the company's store owner shareholders with next to nothing.

Musgrave's offer was followed by a string of rival offers, ranging from takeover bids, such as that proposed by Iceland's owner the Big Food Group, to merger proposals like those from Nisa-Today's and Costcutter.

The Cop-op and Somerfield have also both been linked to potential bids for the Londis group, but neither has as yet confirmed their interest.

Londis supplies groceries and services to more than 2,000 independent store owners who trade under its banner. Each of these store owners is a shareholder in the group.

And it is two groups which operate in a similar way which are the most likely to lead the race to acquire Londis, according to retail analyst Bryan Roberts at M+M Planet Retail​.

"With Musgrave poised to re-enter the fray and BFG having set its stall out fairly robustly, it seems that these are the two strongest suitors,"​ Roberts told FoodandDrinkEurope.com​."Both have the necessary financial firepower and symbol group expertise to offer the Londis retailers the best short-term financial gains and long-term potential for successful survival.​

"Nisa and Costcutter are still stalking on the margins, but some Londis retailers have dismissed Costcutter's initial approach as having too many strings attached. Nisa is yet to show its hand, but what it can offer is unlikely to be overwhelmingly enticing."​

He continued: "In any case, when the dust has settled, there will be a large number of defections and shifting allegiances between the different symbol groups as the retailers migrate - it is important to remember that the winner in this battle is not buying the Londis stores, but buying the Londis brand."​

As for the suggestion - put forward by some Londis retailers themselves - that multiple grocers Tesco or Sainsbury might be interested in a takeover, Roberts was unconvinced.

"I find it incredibly hard to believe that either Tesco or Sainsbury would be looking to get involved, as both companies only operate company-owned stores and lack the necessary experience in overseeing independent retailers.​

"Both companies also have more important things on their mind at the moment - Tesco with the T&S conversion programme and the Adminstore bid and Sainsbury with the Bells deal and impending TM approach (not to mention sorting its supermarkets out) - and it is far-fetched to think they'd be considering dipping a toe into these increasingly muddied waters."​

He concluded: "The fact that the regulators appear to be getting increasingly tetchy about the acquisitive growth by the big grocers will also act to dissuade any involvement."​