Iceland boss faces battle for chain he founded

Iceland retail boss Malcolm Walker will face a battle with two private equity firms this week over the chain he founded more than 40 years ago.

With Bradford-based Morrisons and Leeds-based Asda now unlikely to bid, Mr Walker remains in the £1bn auction alongside BC Partners and Bain Capital.

Mr Walker, who with other members of the senior management team owns a 23 per cent stake in the company, said he has rejected multiple approaches to work with private equity on a bid.

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He said: “I’ve worked independently my entire career and the idea of working for other people is just too difficult.

“I thought long and hard and I’m now 100 per cent sure it’s the right thing for us to do this alone.

“If I can buy the business with my management team, I will do that at the right price. If not, we’ll sell our shares and move on.”

Mr Walker’s bid team has lined up £150m of backing from a Canadian pension fund to buy the business, which has nearly 800 stores and was put up for sale last year with a price tag of up to £1.5bn.

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Interest from Morrisons has waned in the current climate, particularly after Tesco’s profits warning last month.

Morrisons will be busy over the next few months bedding down the 10 out-of-town sites it has bought from Best Buy Europe to extend its kiddicare brand.

Meanwhile Asda is focused on developing its smaller supermarket business after the £778m acquisition of Netto UK 18 months ago.

Mr Walker is not expected to submit a bid ahead of tomorrow’s deadline as existing shareholder agreements give him 42 days to match any existing offer.

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The retailer is being sold off by creditors to Icelandic bank Landsbanki, the collapsed bank that took control of the chain in 2008.

Iceland has boomed since the economic downturn as consumers consider frozen food as good value for money.

Its sales are thought to be up around six per cent over the Christmas period.

Iceland, which has 750 stores, reported record results last year.

Sales grew 5.9 per cent to £2.4bn.

Net profit before tax increased by 14.8 per cent to £155.5m.

A further 20 new stores were opened across the UK last year, creating 1,500 jobs, and the company ended the year virtually free of debt.