Iceland Foods' 'long-term greedy' founders may seek bigger stake
Reuters
Published Mar 10, 2020 15:18
Iceland Foods' 'long-term greedy' founders may seek bigger stake
By James Davey
LONDON (Reuters) - The founding family of Britain's Iceland Foods could seek to regain outright ownership when South African investment company Brait (J:BATJ) disposes of its stake, the frozen food specialist's joint managing director said.
It would be a vote of confidence in a sector under pressure from German discounters Aldi and Lidl, wage growth and an uncertain economic outlook.
Some 63% of Iceland is owned by Johannesburg-listed Brait with the balance held by Malcolm Walker, who founded the supermarket group in 1970, his son and joint managing director Richard Walker and other management.
Brait, under pressure to reduce debt, said in November it planned to sell its stakes within five years in several British companies, including Iceland.
"There's no end of options," Richard Walker told Reuters when asked if the family could seek to regain full or near full ownership of a business that trades from almost 1,000 stores.
He did not provide any timelines.
He also said amalgamation in the sector was "probably inevitable", even though Britain's competition regulator last year blocked Sainsbury's (L:SBRY) attempt to take over Asda (N:WMT) for 7.3 billion pounds.
Iceland is Britain's ninth biggest supermarket in overall grocery market share, but it is second only to industry leader Tesco (L:TSCO) in frozen food and it could benefit from consumers stocking up on products that have a long life because of anxiety about coronavirus.
Even with only a minority holding, the Walker family controls the running of the business through a shareholders' agreement.
Walker senior-listed Iceland on the London Stock Exchange in 1984.
It merged with wholesaler Booker in 2000 and was purchased by a consortium led by Icelandic investor Baugur in 2005.
Baugur collapsed after the financial crisis and in 2012 Malcolm Walker was among those who bought it back from the liquidators of failed Icelandic banks in a deal valuing it at 1.55 billion pounds.
"Over the last 50 years dad's owned 100% of the business, he's owned 0% of the business, he's been kicked out and not been involved, it's been a public company where he's been the boss, and he's had joint venture partners," Richard Walker said.
One option Walker all but ruled out was a return to the stock market through another initial public offering. He said the family had not enjoyed the City requirement of quarterly reporting, which was at odds with a company focus on the longer term.
Get The App
"You can't be as flexible or disruptive or fleet of foot and you also can't be our mantra which is 'long-term greedy'," he said.
Another issue is Iceland's debt. The firm ended its third quarter with net debt of 738 million pounds.
Iceland's turnover rose 2.5% to 2.42 billion pounds in the 40 weeks to Jan. 3, an outcome ahead of the market, driven by new store openings. However, core earnings fell 8% to 81 million pounds, partly because of voucher promotions.
Overall sales were positive in its fourth quarter, despite fragile consumer confidence and bad weather.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.