Matalan sale sparks interest
November 4, 2019 | News | No Comments
Some of the world’s biggest private equity groups are queuing to examine £1.5bn bids for Matalan, UK’s conglomerate discount retailer, which has received interest in recent days from KKR, Blackstone, Cinven and TPG. According to the Financial Times, CVC Capital Partners, the UK-based private equity group, has a head start over its rivals after it made the initial approach to Matalan and held a preliminary meeting with the retailer’s management about a deal.
But since then, several big private equity groups have been scrambling for position in the early stages of an auction, which is being run by PwC. All parties declined to comment on Tuesday.
“All big private equity groups are asking themselves if they should look at Matalan,” said a banker who is working with one potential bidder. “CVC has a head start, but that doesn’t mean they will win in the end.” CVC has experience of the UK retail sector having been part of the consortium that bought Debenhams. KKR owns Alliance Boots, the pharmacy chain, while TPG was also part of the Debenhams deal.
Cinven has backed several UK retailers that it has since sold, including Hamleys and Peacocks, and it still owns Camaïeu in France and Maxeda in the Netherlands.
Bankers said that private equity groups were likely to be able to raise debt financing quite easily for a buy-out of Matalan.
“This is a defensive business that does well in a downturn,” said one banker. “It is the right business model in its pricing and products for banks to lend to.”
Matalan has ridden the tide of cash-strapped consumers trading down to discount retailers. It has also improved its product ranges, revamped stores and introduced new brands. A sale would net hundreds of millions of pounds for John Hargreaves, the founder and controlling shareholder, who took the business private three years ago in an £817m deal.
It is unlikely that Matalan would ever return to public ownership, given Mr Hargreaves’ clash with investors and non-executive directors when he took the business private.
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