Somerfield rejects £1bn takeover move

British supermarket chain Somerfield today said it had rejected a £1bn (€1.44bn) takeover approach from the acquisitive Iceland-based retail group Baugur.

The Bristol-based company, which owns the Kwik Save chain, knocked back the approach as there could be no certainty that the proposal would deliver a formal offer at an “appropriate level” to shareholders.

Baugur recently completed the takeover of Big Food Group and is thought to be keen to bring the Iceland retail chain into the larger Somerfield operation.

It is the second time in less than two years that Somerfield has rejected a takeover approach. In 2003 it rejected a £594m (€858.7m) approach from retail entrepreneurs John Lovering and Bob Mackenzie.

The chain, which operates from 700 Somerfield stores and more than 500 Kwik Save sites, recently revealed a decline in like-for-like sales as it joined other retailers in warning of challenging trading conditions.

Baugur has also acquired Hamleys and Goldsmiths in recent months, following an acquisition spree that has given it an annual turnover of £6.8bn (€9.8bn).