A BID for Somerfield is not expected until the middle of next month, it emerged yesterday, as one of three interested parties pulled out.
United Co-operative, which appeared as a surprise contender two months ago, would not give a reason for its decision to walk away. But sources close to the negotiations said that the Rochdale-based convenience store owner was likely to have been deterred by the scale of the deal, particularly given the troubles at Wm Morrison since it took over its much larger rival Safeway last year.
United, which has a turnover of about £900 million compared with Somerfield’s £5 billion, would have had to borrow heavily to finance the deal during a period of poor trading on the high street. It is understood that United would still be interested in buying a parcel of Somerfield stores if they should come on to the market.
Shares in Somerfield gave up ½p to 189½p yesterday.
Paul Smiddy, an analyst at Baird, said: “United was a fringe spectator in the cheap seats. Its withdrawal is unlikely to affect the outcome.”
Advertisement
Mr Smiddy argued that the battle for Somerfield would continue to be a straight race between the Livingstone brothers, the founders of London & Regional, who are backed by Nomura, the Japanese bank, and a rival consortium that includes Robert Tchenguiz, the property entrepreneur, Baugur, the Icelandic retail investor, and Barclays Capital and Apax Partners, the private equity firms.
Both of the parties are understood to have completed due diligence. However, sources close to the talks said that each side was taking time to reflect on the information while negotiations on price get under way.
At present both remaining contenders are thought to be considering bids of about 205p a share, valuing Somerfield at £1.12 billion, although it is thought that the final price could reach more than 215p.
Somerfield has been on the market since February when Baugur first made an offer of 190p a share, which was rejected by the board.