>>Musgrave is a great opportunity for londis retailers
So the year is ending as it started - with a controversial takeover deal that has stunned the industry. But while this week’s bid for Londis was unexpected, the fact that it is being acquired by Musgrave should surprise no-one.
Let me explain. Way back in May 1999, I interviewed Musgrave boss Seamus Scally who made perfectly clear the Irish group’s ambitions for Britain. It took Scally longer than he probably wanted to gain a foothold on this side of the Irish Sea.
But having finally established a bridgehead with Budgens, Musgrave has been extremely bullish about the prospects for building an independent alternative to the big chains. In addition, its charismatic UK chairman, Eoin McGettigan, has been a welcome addition to the ranks of those talking up the prospects for the small store sector.
By putting Londis and Budgens together, Musgrave is showing that it is prepared to put a big chunk of its money where its corporate mouth is. In so doing Musgrave will be able to create a business with real clout in the UK; one that spans the entire small store spectrum from convenience to full-service supermarketing; one with the scale needed to help independents compete.
For these reasons, I believe the deal is good news for existing Londis retailers, even though I accept that ‘selling out’ does run contrary to the principles of mutualism on which Londis was founded almost 50 years ago.
Nonetheless, those retailers we contacted soon after the takeover was announced were certainly very positive about the prospect of being supplied by a much bigger group and, of course, receiving £10,000 or so.
But then things started to turn sour. Leading Londis members - and other top independents - rang us to express their anger at the news that four directors would walk away with more than £20m should the deal go through. “Ethically it’s all wrong,” said one top retailer, who pointed out that the company had been built up over many years by the hard work, and the funds, of its members. It’s worth noting that the controversial options scheme actually dates back to 1996. And the directors concerned do deserve to be rewarded - after all, they are widely recognised as having been instrumental in first saving Londis and then turning into such a successful operation.
But it still doesn’t feel right that they should profit to such an extent.
A great deal turns sour
So the year is ending as it started - with a controversial takeover deal that has stunned the industry. But while this week’s bid for Londis was unexpected, the fact that it is being acquired by Musgrave should surprise no-one.
Let me explain. Way back in May 1999, I interviewed Musgrave boss Seamus Scally who made perfectly clear the Irish group’s ambitions for Britain. It took Scally longer than he probably wanted to gain a foothold on this side of the Irish Sea.
But having finally established a bridgehead with Budgens, Musgrave has been extremely bullish about the prospects for building an independent alternative to the big chains. In addition, its charismatic UK chairman, Eoin McGettigan, has been a welcome addition to the ranks of those talking up the prospects for the small store sector.
By putting Londis and Budgens together, Musgrave is showing that it is prepared to put a big chunk of its money where its corporate mouth is. In so doing Musgrave will be able to create a business with real clout in the UK; one that spans the entire small store spectrum from convenience to full-service supermarketing; one with the scale needed to help independents compete.
For these reasons, I believe the deal is good news for existing Londis retailers, even though I accept that ‘selling out’ does run contrary to the principles of mutualism on which Londis was founded almost 50 years ago.
Nonetheless, those retailers we contacted soon after the takeover was announced were certainly very positive about the prospect of being supplied by a much bigger group and, of course, receiving £10,000 or so.
But then things started to turn sour. Leading Londis members - and other top independents - rang us to express their anger at the news that four directors would walk away with more than £20m should the deal go through. “Ethically it’s all wrong,” said one top retailer, who pointed out that the company had been built up over many years by the hard work, and the funds, of its members. It’s worth noting that the controversial options scheme actually dates back to 1996. And the directors concerned do deserve to be rewarded - after all, they are widely recognised as having been instrumental in first saving Londis and then turning into such a successful operation.
But it still doesn’t feel right that they should profit to such an extent.
A great deal turns sour
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