Musgrave ups British Londis bid

THE Musgrave Group has upped its bid for Londis in Britain by €30 million to €90m in an attempt to achieve its goal of becoming the biggest supplier to independent retail grocers in Ireland and Britain.

Musgrave were first out of the traps to secure a deal with Londis in Britain, which has no association with Londis in Ireland, when it secured management agreement for a €60m takeover bid for the company.

However, a revolt by Londis's shop owning shareholders, aggrieved that Londis management were to get €30m of the sale price, precipitated a bidding war which drove the price to €90m with Musgrave seeing off more that 20 rival bidders.

Last month Londis agreed to pay its four executive directors a total of €3m to give up their rights to half of any bid proceeds.

Musgrave already dominate the wholesale market in Ireland with their SuperValu and Centra franchises which are operated by independent owners.

If, as expected, Londis shareholders agree to the new deal it will mean that each shareholder will get €47,000.

Musgrave will then be set to become the biggest supplier to the growing independent retail convenience market in Britain through their Budgens and Londis operations. Musgrave managing director Seamus Scally said he does not envisage Musgrave making any further acquisitions in Britain for some time as the integration of Londis with Budgens will take up a lot of management time for the foreseeable future.

Mr Scally said that while the final €90m purchase price is a "very full" price, the growth in the business since they first offered to buy it coupled with the acquisition of greater knowledge of the Londis operation led them to make the €90m offer for the business.

"We are delighted that the Londis board is recommending Musgrave's offer to its shareholders. Musgrave has a deep commitment to the independent grocery retail sector," he said.

"Our long heritage of working with independent retailers gives us a level of expertise and know-how, which is unique in British retailing.

"Our aim always is to provide total support to progressive independent retailers giving them the opportunity to grow their stores and serve their communities," Mr Scally said.

Londis, a supply network owned by 1,919 franchise operating shopkeepers, said the offer wasn't the highest it had received. However, Londis believes it provides the best long-term future for the group facing fierce competition in the British convenience store sector from the likes of Tesco.

Mr Scally said that Londis store owners would be more than welcome to purchase any of the 172 Budgens stores it is selling-off in Britain to independent retailers who will operate the shops as franchise operations.

Musgrave paid €270m to acquire Budgens in 2002 and it is expected to generate more than sufficient cash from the store sell-off to finance the Londis deal.

Mr Scally said once the Londis deal is agreed, a special planning team made up of Musgrave, Budgens and Londis management will devise a strategy for the integration and development of the British businesses.