Big Food pact clears way to bid

BIG Food group has reached agreement with would-be bidder Baugur over its £192m pensions deficit, leaving the way clear for the Icelandic company to launch its takeover offer.

But a tumble into the red over the first half and a further sales decline at the Booker-to-Iceland stores group means Baugur is likely to cut its initial offer of 110p a share to 100p or less. At 110p, Big Food was valued at £378m.

Funding of the pensions deficit could have scuppered any deal but Big Food chief executive Bill Grimsey said today the pensions issues had been 'resolved in principle'.

Due dilligence is progressing and he expects it to be completed in the next few weeks. However, he cautioned that there can be no certainty at this stage that agreement will be reached over price.

Big Food made losses of £9m at the pre-tax level, against a £2.8m profit last time. Excluding exceptionals, operating profits for the 24 weeks to 17 September were £27.1m against £28.6m.

The dividend is 1p a share, subject to the Baugur bid.

Like-for-like sales for the five weeks to 5 November are down by 3.1% overall, 3.9% at Booker and 3.4% at Iceland, a slight improvement on the 3.9% fall in the second quarter.

Sainsbury has poached a new retail director from Tesco. Ken McMeikan, 39, will join the group's operating board early next year.