Musgrave bids for Londis in Britain

IRELAND’s largest food distributor — Musgrave Group plc — has made a surprise €57m bid for Londis in Britain, which has a turnover of more than €1.4bn.

The offer has no impact on the totally separate and independent Londis operations in Ireland.

Musgrave has agreed with the British board of Londis to buy the entire issued capital of the company. This offer will be considered and voted upon by British shareholding members at a Londis EGM on December 30. If it is accepted, Musgrave will take control of Londis at the end of January 2004.

The deal, if completed, will enable Musgraves to develop the successful franchise model of independently owned stores trading under a symbol like the SuperValu and Centra operations in Ireland, which has delivered 24% of the Irish retail market to the company.

Londis has 2,232 stores throughout England, Scotland and Wales.

When the buy-out is completed, Musgraves will have 1% of the British retail market.

Musgraves Group managing director Seamus Scally said they plan to develop the convenience store model to expand in Britain, where the large stores owned by the big four multiples dominate the market.

Mr Scally said that while different, the Irish and British retail food trade were equally difficult, but said Musgraves have maintained its 24% market share despite the growth of the German discounters Lidl and Aldi.

Musgraves already own 230 medium-size Budgen supermarkets and convenience stores in the south of England and if the proposed deal goes through, the Londis name will be retained alongside that of Budgens.

It is envisaged that there will be purchasing, retail development and other synergies between the companies.

Musgrave Group chairman Hugh Mackeown said: “The strategy of the Musgrave Board continues to be based on our commitment to supporting the development of the independent grocery retail and foodservices sector.

The Londis business bears a striking resemblance to Musgrave in terms of retail formats, franchise models and management culture.

Mr Scally said: “We are confident that the Londis shareholders will see the value to them of our offer, which will enable them to continue operating as independent storeowners, but benefiting from an even better distribution network and the marketing and franchise support which Musgrave is able to offer.”