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Sports Direct owner Mike Ashley has pulled out his bid for scandal-hit bakery chain Patisserie Valerie, only two days after his efforts to buy the chain out of administration.
The sport retailer yesterday said it was “reluctantly” withdrawing its bid to save the café chain after it said administrators withheld vital information.
Administrator KPMG has reportedly told Ashley to return to the drawing board, dismissing his £15m bid as too low.
The firm wrote to KPMG, claiming it had made a “serious and substantial” offer, but was rebuffed by the administrators which said it needed to raise its bid to at least £18m.
In a letter seen by the Financial Times, Chris Wootton, deputy chief financial officer at Sports Direct, said the retailer had “not been allowed access to a data room, any financial information or meetings with management”.
Ashley, who has recently bought cycle chain Evans and department store House of Fraser out of administration, announced the offer of Friday evening to acquire the whole remaining business.
Patisserie Valerie collapsed last month and announced the closure of 70 stores, but kept 121 open in the hope of achieving a rescue sale.
Former Drucker’s owner David Scott and coffee chain Costa are reported to be amongst the fierce competition to buy the retailer.
CEO of the embattled chain Steve Francis, previously told the Grocer that an “avalanche of names” were in the frame to purchase Patisserie Valerie, as bidding began last week.
The retailer’s owner Patisserie Holdings went into administration last week after attempts to renew its banking facilities following the discovery of a £40m black hole in October failed.
KPMG confirmed the shuttering of 71 outlets, comprising 27 Patisserie Valerie stores, 19 stores under its Druckers café brand and 25 Patisserie Valerie concessions in Debenhams, Next and at motorway service areas, as well as the termination of a concession deal with Sainsbury’s, at a cost of 920 jobs.
The Serious Fraud Office is carrying out a criminal investigation into Patisserie Valerie and finance director Chris Marsh was arrested and released on bail after having been suspended by the company.
Also under investigation, by the Financial Reporting Council, are former Patisserie Valerie auditors Grant Thornton.
Morning update
Activist investor Cat Rock has called on listed takeaway delivery operator Just Eat (JE.) to start merger talks with a “well-run industry peer”.
The calls come weeks after the departure of CEO Peter Plumb, who left the business following heavy criticism from Cat Rock over the decline in value under his leadership.
The US hedge fund, which owns a 1.7% stake in Just Eat, said that a merger “would be a far better outcome for shareholders than relying on the board to choose a new chief executive, particularly given the board’s poor record of chief executive selection”.
The delivery operator slumped during Plumb’s 16 month tenure as it struggled to compete with the likes of Deliveroo and Uber Eats in an increasingly squeezed market.
Cat Rock’s comments this morning are the latest damning remarks, after it called out Just Eat as the “world’s worst performing online food delivery stock” in December.
“The board’s experiment of appointing an industry outsider like Mr Plumb to the chief executive role failed miserably and destroyed shareholder value,” commented Alex Captain, founder and managing partner of Cat Rock.
“Now Just Eat needs a world-class management team with online food delivery experience and proven delivery capabilities.
“A merger is an obvious path for securing these advantages for the company.”
The FTSE 100 has surged 0.7% to 7,119pts this morning as it recovers from a retreat late on Friday.
The early risers include PayPoint (PAY), up 3% to 907.4p, Treatt (TET), up 2.8% to 440.8p, and Majestic Wine (WINE), up 2.2% to 276p.
The fallers include Stock Spirit Group (STCK), down 2.8% to 218.6p and Anglo-Eastern Plantations (AEP), down 1.8% to 534p.
This week in the City
It is set to be a fairly quiet week in the city, with only a few announcements of interest.
Much of the focus this week is set to be on Brexit, as MPs address the latest ‘meaningful vote’ on Thursday. Also the CMA is expected to issue the results of its preliminary investigation into the Sainsbury’s/Asda merger in the coming days.
As far as the London Stock Exchange is concerned, it is somewhat quieter, with no obvious results announcements affecting the sector set to be announced on Tuesday.
Wednesday will see packaging specialist Smurfit Kappa Group (SKG) announce its full year results, as it hopes halt its decline is share value over the past six months.
The latest ONS Consumer Price Index will also be revealed on Wednesday morning to highlight inflation on consumer goods.
In Europe, booze giant Heineken will announce its full year results for 2018 on Wednesday, as it looks to stem the decline profits it revealed during its half-year results announcements.
On Thursday, consumer giant Coca-Cola Co, and its other international arms European Partners (CCEP) and Hellenic Bottling Company (CCH), will announce their full year figures.
The same day will see Nestle announce its results for the period, as it looks to maintain strong growth in the US and China.
On Friday, fellow snacking and drinks giant PepsiCo (PEP) will also reveal its performance over 2018. While in the UK the official ONS retail sales figures for January will be released.
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