The managers of the company that owns the Spar grocery franchise in Ireland are set to buy the business from its biggest shareholder in a €400 million deal.
Leo Crawford, chief executive of BWG, which owns the franchise, his finance director John O'Donnell, and businessman John Clohisey, have agreed to buy the company from its main shareholder, Electra Partners.
The managers, who have been advised by NCB Corporate Finance, now have exclusivity on the proposed deal.
The deal values the business at €400 million. This represents an increase of over 80 per cent on the €220 million price tag placed on BWG when Mr Crawford joined forces with venture capitalist, Electra, to buy it in 2002 from its then owner, drinks group, Pernod Ricard, which owns Irish Distillers.
Electra owns 65 per cent of BWG. Mr Crawford and his colleagues own 15 per cent and Mr Clohisey owns 20 per cent through his vehicle, Newhill.
Newhill took that stake in 2002 when BWG bought its chain of 115 Spar-branded shops for €45 million during the Electra-backed buyout.
AIB will provide the funding for the deal. There had earlier been speculation that Mr Crawford would again seek the backing of a venture capitalist for this buyout.
The deal has been expected since July, when BWG appointed IBI Corporate Finance to look at the options facing the company. The review was scheduled to end this month.
In the interim, it emerged that Mr Crawford was looking at the possibility of buying out the group and was seeking an equity partner to join forces on the deal.
It was also said to have attracted the interest of private equity houses in London, although none of them subsequently emerged with a bid.
Electra set a five-year time limit on its investment when it bought into the business in 2002, so its exit was not unexpected.
The company has interests in 900 convenience stores in Ireland and Britain. BWG Retail operates the Spar, Eurospar and Mace franchises in the Republic.
It also has a wholesale cash-and-carry arm with 24 outlets and a food service unit that supplies the catering industry.
In Britain, it owns Appleby Westwood, which is a Spar wholesaler in south-west England with 340 Spar franchises.
At the end of last year, it had 428 Spar shops and 138 Mace stores in Ireland. It owned and operated 140 of these, while independent franchisees operated the other 426 outlets.
Earlier this year, it announced plans to sell 40 Spar units to franchisees for €90 million.
It said the move was part of its strategy of focusing on its main activity.
This year it intends to add 39 new Spar and 11 new Mace franchises to its network and it hopes to expand both chains at a similar rate in 2007.
In 2005, BWG had a turnover of €1.66 billion, the first year it topped the €1 billion mark. Operating profits were €55 million.
