Malcolm Walker, the founder and current CEO of Iceland Foods, will reportedly not make an offer to buy the remaining shares in the UK food retailer in the first round of bidding.
The Daily Telegraph newspaper today (17 October) said that Walker, who along with other management has a 23% share in Iceland, will not bid in the first round for the remaining 77%, even though he has spoken of his desire to buy the shares.
Failed Icelandic banks Landsbanki and Glitnir have combined their respective 67% and 10% stakes in the frozen food retailer up for auction.
However, Mr Walker only has to match the highest bid from a rival in order to secure the shares, thanks to a clause within a shareholder agreement.
A source familiar with the situtation told just-food that there had been discussions between Walker and numerous potential providers of finance but could not comment further.
Morrisons and Asda have been touted by industry watchers as potential bidders for Iceland.
However, Justin Scarborough, an analyst at RBS, said Walker was in a strong position thanks to both the clause and the fact that the major UK retailers are unlikely to be be able to buy the whole estate because of competition concerns.
“His strategy is clear. He doesn’t have to bid in the first round and the sellers will have to inform him at any stage when he has to come in [if another retailer makes a bid],” he said. “I think ultimately he’s in prime position, depending on his ability to raise the right amount of finance.”
Scarborough added that, even if Walker was unable to pull together the full amount, other options are availabke to him.
He added: “For example, if his bid was GBP200m (US$314.6m) short, there’s nothing stopping him from talking to Morrisons or Asda to come to an agreement over a certain number of stores.
“We already know that the Office of Fair Trading and Competition Commission have become involved when it comes to supermarkets increasing their estate from Asda’s acquisition of Netto.”
Numerous financial media and analysts have reported that the banks handling the sale are looking at a valuation of about GBP1.5bn.
A spokesman from Landsbanki was not available for comment.