Bank linked to Iceland Foods sale

Frozen food supermarket Iceland and toy emporium Hamleys are to be sold by failed Icelandic bank Landsbanki, according to reports today.

The bank is to put its 67% stake in Iceland Foods’ 800 store empire on the market and hopes to complete a sale, valuing the company at about £1.5bn (€1.7bn), in the next 10 months, the Daily Telegraph said.

Landsbanki is also open to offers for its 65% stake in toy emporium Hamleys although it has not yet started a formal sales process, Retail Week added.

Iceland Foods’ founder and chief executive Malcolm Walker, who owns about 24% of the business with his management team, made a £1bn (€1.1bn) bid to take full control of the company last autumn and is likely to be among the bidders.

Landsbanki also owns a 35% stake in department store group House of Fraser and 66% of Aurum, which owns Mappin & Webb, Watches of Switzerland and Goldsmiths, but is not understood to be selling these stores in the immediate future.

Landsbanki came to own stakes in the retailers after Icelandic investment firm Baugur, which bought out great swathes of the UK high street, went bankrupt and its assets were seized by the bank.

Landsbanki is gradually winding up its assets and chose to sell Iceland first because of its strong performance in recent years after Mr Walker returned to the company in 2005 and led a renaissance.

Iceland has boomed in the recession as sales of frozen food grew because it is considered to be good value for money by consumers.

Landsbanki's head of communications Pall Benediktsson told Retail Week that he expected both businesses to attract substantial interest.

He said: “The market is getting better so it’s time to start proceedings. These are highly valued and well known companies. We get lots of requests and people are approaching us.”

He said it was likely that the bank will sell all its assets in the next three years but stressed there will be no sale of its share in House of Fraser until at least 2012 and no sale of its share in Aurum “for some time”.

A spokesman for Iceland Foods said: “We are not aware of a sale process and we are surprised by the press reports as any sale process can only take place with the involvement of the Iceland management.”

If Mr Walker was to regain control of Iceland Foods it would mark one of the most remarkable business comebacks in retail history.

He founded the business in 1970 and built it up into a major national chain but was ousted as chairman in 2001.

Baugur brought Mr Walker back when it bought the company in 2005 and it has grown both sales and profits every year since. It last year reported record pre-tax profits of £135.4m (€157m), up 19.4% on the previous year.

Hamleys, the 250-year-old toy brand, is one of the world’s most famous retailers and has seven stores in the UK and others in the Middle East, India, and Ireland.