Somerfield bidding war breaks out

13 April 2012

A £1bn-plus bidding war is likely between some of Britain's richest property developers over ownership of the Somerfield supermarkets group, already on the receiving end of a 190p-a-share approach from acquisitive Icelandic retailer Baugur.

Shares in Somerfield jumped 8p to 202½p today as the group revealed it had received 'further proposals regarding possible cash offers for the company'.

Property developer Robert Tchenguiz is behind one of the new approaches, thought to be pitched above the proposed Baugur terms at 205p a share. This values Somerfield, which also owns the ailing Kwik Save chain, at £1.12bn.

The low- profile Livingstone brothers Ian and Richard are also believed to have approached the Somerfield board with bid proposals. Their privately-owned London & Regional Properties group is one of the most active developers in the market, owning a large property portfolio including the London Hilton hotel in Park Lane.

They recently bought the former Marks & Spencer head office, Michael House in Baker Street, in a deal worth £115m and are also working on a £500m office, hotel and housing scheme on the Greenwich peninsula.

Tchenguiz has teamed up for his bid approach with Barclays Capital and Apax Partners. Together with his brother Vincent, Tchenguiz is placed in 101st position in the most recent Sunday Times Rich List, with a fortune of £400m. The Livingstone brothers, who also own the David Clulow chain of opticians, are in 223rd place with £180m.

MESSAGE BOARDS: Talk about Somerfield shares

Tchenguiz has worked with Somerfield before, backing last year's £260m acquisition of 114 smaller Safeway stores from Morrisons. In a surprise move yesterday, that deal was referred to the Competition Commission, which will be looking at the impact on local competition of about 22 of the mid-range stores involved in the deal, and a single one-stop store.

He has made a number of moves in the retail sector and launched an unsuccessful attempt to buy the Selfridges stores group a couple of years ago.

Somerfield will discuss the new bid approaches at a board meeting to be held after the Easter break and is thought likely to open its books to the higher bidders.

It refused to allow Baugur access to its books because the Icelandic company now controls Big Food Group, which owns the rival food retail chain Iceland frozen foods. Baugur's indicative offer was subject to a number of conditions, including agreement with the pension fund trustees.