ICELAND Foods’ chief executive Malcolm Walker and his management team are in exclusive talks to take over the frozen food retailer in a £1.55bn deal.
Yorkshire-born Mr Walker said the directors are in talks to buy out the 77 per cent stake they don’t already own from failed Icelandic banks Landsbanki and Glitnir.
“We’ve moved into exclusive talks,” said Mr Walker, who along with other managers already owns 23 per cent of Iceland Foods.
He said a deal is likely to be reached in two to three weeks.
Iceland confirmed its management has signed an agreement with the two Icelandic banks, which gives it the opportunity to buy the company ahead of any other possible bids.
Mr Walker declined to give details on the financing of his bid, but said he was not working with rival private equity bidders Bain Capital and BC Partners.
His backers are understood to include Doncaster-based DFS founder Lord Kirkham, the Landmark Group, which owns Italian restaurant chain Carluccio’s and South African private equity form Brait.
“I am delighted that the Icelandic banks have recognised the importance of management to the continuing success of the business, and have been supportive in giving us the exclusive right to pursue negotiations with them,” said Mr Walker.
“I have every hope that we will be able to bring these to a successful conclusion within the coming weeks.”
Landsbanki said the two banks have signed a deal with firms owned by the leadership of Iceland Foods, including Mr Walker, regarding the sale of Iceland Foods.
“It is expected that a formal sale agreement will be signed shortly and the banks will issue statements regarding the process,” Landsbanki said in a statement.
Bain Capital and BC Partners placed bids for the frozen food retailer earlier this month, leaving Mr Walker 42 days to match the highest bid under a shareholder agreement.
The Icelandic owners rejected a £1bn bid by Mr Walker in 2010 for the remainder of the business, which he founded in 1970.
Landsbanki took control of the chain in 2008.
Mr Walker has had a colourful past at Iceland. He lost his job at the company in 2001 but was brought back in 2005 to revive its fortunes and sales have grown every year since.
Iceland has boomed during the economic downturn as sales of frozen food have rapidly grown as consumers look for ways to save money.
Its sales were thought to be up around six per cent over the Christmas period.
Bradford-based Morrisons and Leeds-based Asda were cited as likely bidders for Iceland in the early stages of the sale process, but are thought not to have bid.
Mr Walker said he had rejected multiple approaches to work with private equity on a bid.
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.”
Iceland has nearly 800 stores and was put up for sale last year with a price tag of up to £1.5bn.
Interest from Morrisons waned in the current climate, particularly after Tesco’s profits warning last month.
Morrisons is also busy 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.
Iceland 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 and like-for-like sales rose by over two per cent.
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.
Iceland has 22,000 staff and attracts five million customers every week. Mr Walker, who was born in Grange Moor near Dewsbury, has overseen 36 years of record results at Iceland. “We’re benefiting from the economic downturn – bad times play to our strengths,” he said.
“All our customers will shop at Tesco or Asda first and they come to us as a secondary shop. Customers are still shopping at Tesco and Asda, but they’re spending more with us than they were before.”
This fits in with the new trend among shoppers for three or four small shops a week instead of big weekly trips.