Musgrave withdraws bid for Superquinn

CORK-BASED wholesale grocery group Musgrave has withdrawn its bid for Superquinn. It is understood that Musgrave was not prepared to meet the valuation being placed on the business by its owners Select Retail Holdings.

Musgrave is believed to have submitted an offer of about €150 million to Goldman Sachs in London, which is handling the process. Superquinn’s owners are thought to be seeking about €250 million for the business.

It is understood that the sale process is still “live”, although it is not clear how many parties remain in the mix.

One informed source said that parties had been informed that a virtual data room would be opened to them next week.

Goldman Sachs is also believed to have indicated that senior executives and managers of Superquinn would be made available to bidders at meetings in London.

KPMG is also thought to be preparing a due diligence report.

Musgrave was one of six parties believed to have expressed an interest in buying the Superquinn chain. The others interested are thought to include UK retailers Asda and J Sainsbury and Irish wholesale grocer BWG, which operates the Spar and Mace symbol groups.

Musgrave was seen as one of the favourites to acquire Superquinn. It already controls more than 20 per cent of the Irish grocery market through its SuperValu and Centra chains, and a purchase of Superquinn would have significantly beefed up its presence in Dublin while keeping a potential UK rival out of the market.

UK multiple Tesco is the biggest player in the Irish grocery market with a share of more than 26 per cent. The approaches for Superquinn relate to its operating business only, and do not involve the acquisition of any properties.

Superquinn generated sales of €620 million in 2007.

Interested parties have been informed that the business is generating earnings before interest, tax and finance costs of €10 million to €15 million a year, although its share of the market has slipped below 8 per cent.

The company has been returned to profitability since Select Retail Holdings bought the business in 2005 from Senator Feargal Quinn and his family for €420 million.

The multiple has 24 stores and its chief executive Simon Burke has stated his intention to grow the chain to 35 stores. Select Retail Holdings received an approach in March from Sainsbury. The process gained momentum in the past couple of months when an unsolicited offer was received from Asda.

Superquinn’s backers include developer Jerry O’Reilly, property consultants David Courtney and Bernard Doyle, and hotelier Terry Sweeney.