Walker bets on Iceland, Ladbrokes cashes in

The supermarket's founder, Malcolm Walker, has signed a deal that should allow him to buy it back for £1.5bn.

by Emma Haslett
Last Updated: 06 Nov 2012

Last time we heard about Iceland (the supermarket, not the country), its founder Malcolm Walker was desperately trying to scrape together the cash to buy it off its owners, failed Icelandic (the country, not the supermarket) bank Landsbanki, before it was snaffled by one of its rivals and broken up. And, happily, it’s now been confirmed that Walker and his band of merry men (aka Iceland’s management team) have entered into exclusive talks that will allow them to buy it for £1.5bn. Aah. All’s well that ends well, and all that.

Walker et al have seen off some pretty stiff competition, not just from competitors Morrison’s and Asda, who were understandably eager to get their hands on 750 pieces of fully kitted-out supermarket real estate, probably the last chance to do so for some time. They pulled out in the first round of bidding – but private equity groups BC Partners and Bain Capital put in second round offers for the company two weeks ago. To no avail, though.

What’s interesting is that ordinarily, for an acquisition of this size, Walker would have gone straight to a private equity company to help him bankroll it. But in this case, he seems unenthusiastic about the idea of giving away equity – so by the looks of things, he’s opted to finance the lion’s share of the deal through debt. Brave man.

Will this herald a Kerry Katona renaissance? We wouldn’t bet on it. Then again, it looks like the UK has become a betting country, judging by results out from Ladbrokes this morning. So perhaps others will.

The bookies said punters bet nearly £13bn in its 2,000 shops last year, with gaming machines drawing £10.5bn worth of bets, while over-the-counter bets hit £2.5bn. Profits per shop apparently rose by 6.9%, although ‘poor results’ in horse racing and football (does that mean more losses than usual?) mean over-the-counter gross win fell by 5.8% to £392.8m. That aside, the only real loss for Ladbrokes was its poker business, where revenues fell by a quarter to £14.2m. No royal flush there, then.

Elsewhere in retail, Kingfisher, the owner of B&Q, said sales in the 13 weeks to the end of January rose by 4% to £2.4bn, pushing sales over the year as a whole up by 3.3% to £10.8bn. No word yet on annual profits, but Kingfisher said it was on track to meet its forecast of a 20% rise – despite the fact that like-for-like sales at B&Q itself fell by 2.5%. That’s because its French businesses, Castorama and Brico Depot, did a roaring trade, with sales up 2.9% and 5.7% respectively. Perhaps boss Ian Cheshire's new bottom-up strategy is paying off.


Update: Changed to show Walker has entered into exclusive talks with Landsbanki, rather than signed a deal.

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