Musgrave, the retail group that owns SuperValu and Centra, has made a €57 million bid for Britain's Londis that would see it take a 6 per cent share of the British convenience retail market.
The proposed deal, which has already been approved by the Londis board, involves 1,933 members of the British co-operative who operate 2,232 stores.
If successful, it would allow Musgrave to link Londis with Budgens, the British convenience store chain it acquired in full last year for an estimated €270 million. The combined turnover of the two chains is slightly more than €2 billion, with some €1.4 billion of this attributable to Londis. The overall worth of the British convenience market has been estimated at €31 billion.
If the deal is accepted by Londis shareholders at an extraordinary general meeting on December 30th, it should conclude before the end of January.
"We are confident that the Londis shareholders will see the value to them of our offer, which will enable them to continue operating as independent store owners, but benefiting from an even better distribution network and the marketing and franchise support which Musgrave is able to offer," said Musgrave group managing director, Mr Seamus Scally yesterday.
Mr Scally said it had always been the intention of Musgrave to grow its business in Britain. He said the combination of Londis with Budgens would allow the group "reasonable scale" in a "very, very big market".
"We were never going to stop at one acquisition. We needed to have greater scale," he added.
Musgrave intends to retain both the Londis and Budgens brands if the deal is completed but expects to benefit from operational synergies between the two, such as greater buying power.
Mr Scally pointed out, however, that "the offer was not made on the basis of any significant synergies". He said it was "very much in-keeping with everything else we do".
The Londis brand is spread fairly evenly throughout England, Scotland and Wales, while Budgens is concentrated in the south of Britain.
Londis made a profit of some £4 million sterling (€5.7 million) last year on turnover of £510 million. Budgens meanwhile contributed €318 million to Musgrave's turnover of €2.8 billion in its first half-year of inclusion in group results last year. It contributed €13 million to group operating profit of €82.6 million.
Group chairman, Mr Hugh Mackeown, said the Londis business bears "a striking resemblance to Musgrave in terms of retail formats, franchise models and management culture".
Privately-owned Musgrave recorded a 22 per cent rise in pre-tax profits to €57.6 million for 2002 in what it described as "a watershed year".
Mr Scally said 2003 had so far been "a strong year" across the group. He said Musgrave's operations had largely been insulated from a "very violent price war" in the grocery sector.
