Superquinn finally makes it to Cork in Musgrave takeover

THERE’S a bit of irony in Musgrave taking over Superquinn. Musgrave is one of Cork’s biggest companies and Superquinn’s expansion plans never quite made it to the deep south.

They went to Waterford, Clonmel, even Limerick but they never made it to Cork and Kerry. It’s ironic now that the company will be operated from a Cork headquartered firm — unusual in the Dublin- centric business world.

Another bit of irony comes with Musgrave saying the only store it doesn’t want is the one in Dundalk, Co Louth — the place where Superquinn was founded 50 years ago by the entrepreneur and now senator Feargal Quinn. It’s a long time now however, since Mr Quinn has had a say in how things are run at Superquinn. What started out as a business that pioneered the way in fancy-stores and online shopping has ended up with a receiver and buyers working through the night to save 2,800 jobs.

There have been reports that Musgrave was interested in buying Superquinn for a few months but it wasn’t until early yesterday it was finally confirmed that the supermarket chain would be staying in Irish hands.

When the hard times hit, it was always going to be difficult for Superquinn to do well. It was a store for the good times and as shoppers flocked to Aldi and Lidl in search of low prices Superquinn suffered. But it wasn’t just that. Superquinn had built up more than €400m of debt in the last few years and on Monday evening KPMG was appointed receiver to the retailer, on the instructions of the banks which are owed the money. Like many other that went before them, it was years of bad property decisions that led them to where they are today.

Latest figures show Superquinn with 6.1% of Ireland’s grocery market. Along with Supervalu’s, Musgrave will own 27.8% of the grocery market against Tesco’s 27.6%.

The big difference will be seen in Dublin where previously Musgrave had 10% of the market and Superquinn had 12% — that gives the company a 22% stake in this market.

Neither Musgrave nor the receiver would reveal the price being paid by Musgrave for Superquinn but industry sources suggest it will pay €100m for the assets acquired.

Compare that to the €450m Senator Fergal Quinn and his family got for it in January 2005.

Musgrave however, can well afford it given they turned around a pre-tax profit of €72m last year.

The challenge now for Superquinn will be to find its identity in the Irish supermarket sector. Is it high end or is it prepared to compete with Tesco and Dunnes? They have for years adopted a sort of Aer Lingus model placing themselves in the mid-range market — they’re not no-frills like Aldi and Lidl but they’re not top of the range either like Donnybrook Fair.

This is how the supermarket was seen by consumers but the figures tell a different story. A recent survey from the National Consumer Agency found a basket of 92 everyday goods was only 1.3% more expensive at Superquinn than Tesco and it was even more expensive than SuperValu. There’s a big task ahead of the new owners to develop a proper image for Superquinn as it fights for its share of the grocery markets.

Approval from the Competition Authority could come in the next four weeks, although it could run longer than that if there are any issues.

A concern about Musgrave being a dominant player in the market is not the reason the deal has been forwarded to the authority, however. Any merger where one of the parties has a turnover of more than €40m must get approval.

For the most part this buyout is seen as a good fit. Musgrave is strong outside Dublin and most of Superquinn’s stores are in the capital.