Woolworths rejects attempt by Icelandic investment group to acquire its stores

ICONIC BRITISH retailer Woolworths yesterday rejected an attempt by Baugur, an Icelandic investment group that is its second biggest shareholder, to break up the group and acquire its 815 stores.

The company said it had received a proposal from Macolm Walker, chief of the Bauger-owned frozen food chain Iceland, to acquire its retail division but had rejected it.

The sweets-to-DVDs retailer, which has a number of stores in Northern Ireland, said it rejected the approach on the grounds it involved a complex restructuring "not achievable in practical terms" and undervalued the company's assets.

"It also required the company to retain all the pension liabilities for current and former employees of the retail business, which is unacceptable to the board," Woolworths said in a statement.

The Sunday Telegraph reported earlier that Mr Walker had made a formal approach for the chain's stores, leading a consortium known to include Baugur, the Icelandic investment group which holds 10 per cent of the beleaguered retailer.

Citing unidentified sources close to the plan, the paper said the consortium was interested only in Woolworths' stores, and not EUK, Woolworths group's entertainment wholesale division, or 2 Entertain, its music and video publishing joint venture with the BBC.

Woolworths, which named Steve Johnson as new chief executive last week following a profit warning last month, said preliminary conclusions of a review into the group's business confirmed that there was a considerable opportunity to build a sustainable value retail proposition based primarily on its small to medium-sized stores.

Woolworths ousted Mr Johnson's predecessor, Trevor Bish-Jones, in June after same-store sales dropped over four fiscal years as fewer shoppers visit British town-centre stores.

Woolworths stock has fallen 48 per cent this year in London, and traded at 6.65p per share on Friday, giving it a market £97 million (€123.25 million).

Baugur was not immediately able to comment on the Woolworths statement.

According to reports, Mr Walker was only willing to proceed if the Woolworths board agreed to retain most of the group's debt and wipe out its pension deficit.

At its financial year-end on February 2nd, Woolworths' net debt was £124 million. While the group's annual report says it has a pension deficit of £48.2 million, this is due to be revalued.

Woolworths said the offer also required the company to retain all the pension liabilities for current and former employees of the retail business.

"This is unacceptable to the board," it said. - ( Agencies)