Somerfield stock rises after takeover proposals revealed

Fresh developments in the £1bn (€1.45bn)-plus takeover saga at Somerfield kept shares in the UK's fifth biggest supermarket chain on the boil today.

The FTSE 250 Index stock rose almost 2% to a new high of 213p after the chain said last night it had agreed to enter into talks with potential bidders.

Three parties are thought to be interested in buying the group, including Baugur after the Iceland-based retail investor delivered a second proposal to the Somerfield board.

Iranian property tycoon Robert Tchenguiz and the Livingstone brothers’ London & Regional property group are also reported to be in the running.

While Somerfield did not disclose the identities or the value of the approaches, a report in the FT said Baugur was now prepared to offer between 210p and 220p a share – valuing the chain at up to £1.2bn (€1.7bn).

The new owner of the Iceland and Booker business Big Food sparked the takeover interest by tabling a £1bn (€1.45bn) approach in February. It was later rejected by the Somerfield board.

Last week reports put the offer from Mr Tchenguiz and his backers from Apax and Barclays Capital at 205p a share with the Livingstone brothers at 190p. It is not known if the value of the approaches have been improved.

The group, which floated on the stock market in August 1996, has 664 Somerfield stores and 560 Kwik Save sites.

Somerfield said in its statement last night that talks with potential offerors would establish whether “proposals could be developed on a basis which could result in a formal offer at a price which could be recommended by the board”.