Malcolm Walker can spot an opportunity when he sees it. In August he offered £50m for Woolworths in a cheeky deal that asked shareholders to retain Woolies’ £172m debt and pension obligations.
Two months and one global economic crisis later, Walker has moved on. In an exclusive interview with The Grocer he claims “now is not the time to buy Woolworths – the world has changed”. So what is Walker, one of grocery’s wiliest wheeler-dealers, up to?
His company may be “trading its socks off”, with the latest TNS data showing sales up 12% in the 12 weeks to 5 October 2008. But some of its major shareholders are in serious trouble. About 70% of Iceland’s shares are owned by people or businesses based in the beleaguered country of the same name.
Landsbanki and Glitnir Banki, two Icelandic banks now nationalised, own 10% and 3% of Iceland Foods respectively. Baugur, the Icelandic retail investment company, which has many loans from stricken Icelandic banks, owns 35% of the shares. And 27% is owned by another Icelandic investor, Fons Eignarhaldsfelag. Having so many Icelandic shareholders could be a problem for Walker’s company, especially if they need to sell.
“It’s a worrying time for Walker,” adds Freddie George of analysts Seymour Pierce. “If the holding co were to go bust its shares could be up for grabs and Walker will obviously want to stay in control.”
Walker insists Iceland Foods is insulated from whatever happens in Iceland. “None of its loans can be called in unless Iceland Foods defaults on them, and the company has £180m in non-Icelandic banks,” he says.
In fact, Walker goes so far as to claim Iceland will be debt-free within 12 months (with £282m in net assets, its gearing was 126% in the accounts to March 2008, with a credit rating of 90%). However, while Baugur claims its finances are stable and none of its shares, in any of its companies, are for sale, speculation is rife that Walker will capitalise on Baugur’s weakened position to buy out the business at a knockdown price.
With Sir Philip Green and private equity companies reportedly in talks with Baugur and the Icelandic Government about buying Baugur’s loans, Walker admits there may be changes to the shareholders. And while playing down speculation that he’s set to capitalise on Baugur’s woes, Walker also refuses to rule out buying more shares personally. The Sunday Times Rich List estimates his wealth at £45m. This is based partly on windfalls from a £60m bonus paid out following a £300m recapitalisation of Iceland last year, plus other dividends. But the majority of his wealth is tied up in Iceland Foods. With pre-tax profits of £34.7m on £1.78bn sales it was valued by The Sunday Times, prior to recent developments, at £400m, with his stake of just under 10% therefore worth £34m. But however desperate Baugur may become, it is unlikely Walker will have enough money to buy all the shares himself. And analysts now believe Walker is trying to raise funds to help set Iceland Foods free.
The bad news for Walker is that banks aren’t lending. The good news is that Baugur has a “shareholders’ pact” in which other shareholders will be offered first refusal on their shares if they are put up for sale. And if Sir Philip wins the battle for Baugur’s business interests, Walker thinks he will only be interested in the fashion businesses.
"Walker is in the driving seat,” says Philip Beresford, author of The Sunday Times Rich List. “If Sir Philip has any sense, he will bow to Malcolm’s knowledge and let him get on with it. “He’s the most important minority shareholder and holds the key to the business.” n
Two months and one global economic crisis later, Walker has moved on. In an exclusive interview with The Grocer he claims “now is not the time to buy Woolworths – the world has changed”. So what is Walker, one of grocery’s wiliest wheeler-dealers, up to?
His company may be “trading its socks off”, with the latest TNS data showing sales up 12% in the 12 weeks to 5 October 2008. But some of its major shareholders are in serious trouble. About 70% of Iceland’s shares are owned by people or businesses based in the beleaguered country of the same name.
Landsbanki and Glitnir Banki, two Icelandic banks now nationalised, own 10% and 3% of Iceland Foods respectively. Baugur, the Icelandic retail investment company, which has many loans from stricken Icelandic banks, owns 35% of the shares. And 27% is owned by another Icelandic investor, Fons Eignarhaldsfelag. Having so many Icelandic shareholders could be a problem for Walker’s company, especially if they need to sell.
“It’s a worrying time for Walker,” adds Freddie George of analysts Seymour Pierce. “If the holding co were to go bust its shares could be up for grabs and Walker will obviously want to stay in control.”
Walker insists Iceland Foods is insulated from whatever happens in Iceland. “None of its loans can be called in unless Iceland Foods defaults on them, and the company has £180m in non-Icelandic banks,” he says.
In fact, Walker goes so far as to claim Iceland will be debt-free within 12 months (with £282m in net assets, its gearing was 126% in the accounts to March 2008, with a credit rating of 90%). However, while Baugur claims its finances are stable and none of its shares, in any of its companies, are for sale, speculation is rife that Walker will capitalise on Baugur’s weakened position to buy out the business at a knockdown price.
With Sir Philip Green and private equity companies reportedly in talks with Baugur and the Icelandic Government about buying Baugur’s loans, Walker admits there may be changes to the shareholders. And while playing down speculation that he’s set to capitalise on Baugur’s woes, Walker also refuses to rule out buying more shares personally. The Sunday Times Rich List estimates his wealth at £45m. This is based partly on windfalls from a £60m bonus paid out following a £300m recapitalisation of Iceland last year, plus other dividends. But the majority of his wealth is tied up in Iceland Foods. With pre-tax profits of £34.7m on £1.78bn sales it was valued by The Sunday Times, prior to recent developments, at £400m, with his stake of just under 10% therefore worth £34m. But however desperate Baugur may become, it is unlikely Walker will have enough money to buy all the shares himself. And analysts now believe Walker is trying to raise funds to help set Iceland Foods free.
The bad news for Walker is that banks aren’t lending. The good news is that Baugur has a “shareholders’ pact” in which other shareholders will be offered first refusal on their shares if they are put up for sale. And if Sir Philip wins the battle for Baugur’s business interests, Walker thinks he will only be interested in the fashion businesses.
"Walker is in the driving seat,” says Philip Beresford, author of The Sunday Times Rich List. “If Sir Philip has any sense, he will bow to Malcolm’s knowledge and let him get on with it. “He’s the most important minority shareholder and holds the key to the business.” n
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