Virgin Atlantic and Cinven eye up acquisitions

Cinven, the private equity firm behind Pizza Express, has been checking out flagging high street retailer Mothercare while Virgin Atlantic sizes up bmi.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013

When the sales are on, it’s time to go shopping. Things are no different in the world of private equity. With Mothercare reporting a £81m loss for the half-year, the closure of 110 out of 353 UK stores and a tumbling share price, the baby products firm could be a real gem for bargain-hunters.

CVC and Montagu Private Equity have also been sniffing around but Cinven is the most likely suitor. However, much depends on Mothercare chairman Alan Parker’s structural and operational review due out shortly. Mothercare might look a steal at the moment but if the international firm can’t be turned around, it’ll be a case of good money after bad.

Still, with 960 outlets overseas and half a century of goodwill behind the brand, it’s a very tasty proposition.

In the world of aviation, Virgin Atlantic is also back on the trail of bmi. Richard Branson’s outfit has made an indicative offer and signed a ‘terms of agreement’ contract with bmi's owner Lufthansa to gain access to the airline's books.

The airline formerly known as British Midland also has a great big ‘final reductions’ sign hanging over it. It lost £132.8m in the first nine months of 2011 and has a stonking pensions deficit to boot. Why are Virgin and IAG so desperate to bag this sitting duck? bmi owns several enviable landing slots at Heathrow, of course.

Virgin is playing hard and fast with bmi, reportedly offering just £50m, half of the figure proposed by IAG. Its reasoning? A Virgin takeover would be seamless, painless and quick, compared to the regulatory hoops that need to be jumped through to merge with IAG (if the latter buys bmi, IAG will own no fewer than 50% of the landing slots at Heathrow – did someone say ‘anti-competitive’?).

With Virgin Money now the happy new owner of Northern Rock, it looks like Branson could be on a veritable buying spree. So it might not only be the 'sale' signs which turn the high street red next year...

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