‘Iceland chief seeks retailers’ backing for bid’

ICELAND founder and chief executive Malcolm Walker has reportedly held talks with the founders of retail chains Matalan and DFS founders about providing backing for his £1.1bn bid for the frozen food grocer.

The Sunday Telegraph said Mr Walker, who with management colleagues controls a 23% stake in the Deeside company, has held conversations with John Hargreaves, the founder of Matalan, and Lord Kirkham, of DFS, about supporting his potential bid for the majority 77% stake which is up for sale.

The pair, along with a small number of other family backers, are believed to have offered equity backing if Walker does bid.

The newspaper said Walker – who founded the business in 1970 –  has already amassed debt financing from a syndicate of banks plus financial support from Alberta Investment Management Corporation.

Under the complex shareholder agreement with Landsbanki and Glitnir – which own the remaining 77% – Walker has to match the highest bid to win the auction.

The two Icelandic banks are selling their stakes in Iceland Foods, which they inherited as the result of the collapse of retail conglomerate Baugur.

But it remains uncertain if Mr Walker will bid at all after Landsbanki demanded bidders offer at least £1.3bn for the business, which is sponsors  ITV’s I’m a Celebrity.

Iceland’s trading, which has improved markedly in recent months, as increasingly cash-strapped consumers turn to value supermarkets.

This has boosted the company’s earnings, which has pushed up its  valuation.

Ebitda is expected to be £205m-£215m for the current year, against £187m last year.

Born in Liverpool, but now based in Monaco, Matalan tycoon John Hargreaves has made a huge fortune from Skelmersdale-based out-of-town fashion and homewares chain Matalan.

Originally a market stall trader, he opened his first stall in Preston in 1985 and the company now has 200 stores.