Co-op rules out Londis bid
vote on a £60 million offer for the group, one of the potential
rival bidders, the Co-op, ruled itself out of the running. The way
now seems clear for Irish group Musgrave to complete its proposed
takeover.
The Co-op has been linked to a possible bid for Londis ever since the retailer effectively put itself up for sale at the end of last year following the rejection of an initial £40 million bid from Musgrave. But the company, which, like Londis, is owned and operated by its members, had never made an official statement of interest in the group - until now.
An eventual offer from Co-op had been considered the principal threat to Musgrave's second bid, recommended by the Londis board, since the mutual status of the company was seen as appealing to a significant number of Londis store owners hoping to retain this status for the company.
Musgrave has stated that all its convenience store operations in the UK - including the Budgens chain which is currently owned by the Irish firm - will eventually be franchised, owned and operated by independent traders along the lines of Londis' current business model, the only real difference being that the group will not be mutually owned.
Shareholders in Londis will vote later today on whether to accept Musgrave's offer, and the company's board welcomed the clarification of the Co-op's position, according to a report in theFinancial Times.
"We are pleased the Co-op announcement clarifies the situation ahead of Tuesday's vote. It would have been very difficult to accept a proposal from one of our main high street competitors. Now shareholders have a simple choice - to accept the one bid that meets all our criteria, the recommended Musgrave cash offer."
The outcome of the vote still remains unclear, with the board needing the support of 75 per cent of shareholders to finally approve the takeover. The decision of both the Co-op and another erstwhile bidder, the Big Food Group, not to pursue their rival bids will certainly make the vote simpler, but there is still one rival offer on the table, from a group called Lancelot, set up by two former directors of the T&S chain now owned by Tesco.
That bid, valuing Londis at £63 million, allowed Londis shareholders to retain control of 60 per cent of the business, thus pandering to the significant minority of shareholders concerned about the loss of mutual status. But the Londis board rejected the move, claiming that Lancelot did not have enough retail experience to offer value to the business.
