Blog: Dean BestTakeover talk again swirls around Iceland Foods

Dean Best | 13 December 2010

Iceland Foods, the UK frozen-food retailer, is again at the centre of takeover talks, although one of its major shareholders this afternoon (13 December) tried to douse the speculation.

Over the weekend, it was reported that a consortium of investors - led by the Global Banking Corporation of Bahrain - was in talks with Iceland Foods' two major shareholders, the Icelandic banks Lansbanki and Glitnir.

The reports marked the second round of speculation over Iceland Foods in two months. In October, it was claimed that Malcolm Walker, the retailer's founder and current CEO who owns 24% of the business, wanted to buy out Landsbanki and Glitnir.

However, talking to just-food today, Landsbanki said there had been no discussions over a possible takeover of Iceland Foods. Yet.

The bank did confirm that it wanted to sell its shares and said it had started preparing to put its stake up for sale. Between them, Landsbanki and Glitnir hold a 76% stake in Iceland Foods and it is likely that Landsbanki will control any sale process as it is "by far" the biggest shareholder, a spokesman said.

However, there had been no negotiations, nor, Landsbanki said, had any formal offer been made.

Nevertheless, Iceland Foods is likely to be on the radar of those who want to invest in the UK retail sector.

Iceland Foods' store estate, which is positioned well for the convenience channel, has driven growth, rather than frozen food per se. The retailer's acquisition of over 50 former Woolworths plc stores has also helped the business during the downturn.

For the year to 26 March, Iceland Foods posted a net profit before tax of GBP135m. By contrast, Aldi swung to a loss during the 2009 calendar year.

In sum, then the business has decent prospects. Like-for-like sales may have slowed but its strength in convenience, particularly in a fragile consumer climate, which in 2011 looks unlikely to drastically improve, makes Iceland Foods a good target.


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