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Livingstones Mulling Bid for Somerfield

Posted on: Wednesday, 19 October 2005, 18:00 CDT

By Rupert Steiner, The Business, London

Oct. 16--London & Regional, the property company controlled by the Livingstone brothers, will decide this week whether to make a counterbid for Britain's fifth-largest supermarket chain, Somerfield.

The brothers, Ian and Richard, who own a property portfolio of more than £5bn, are at the point of closing an unrelated £500m ($875m, E730m) sale and leaseback deal this weekend, but are thought have been watching developments at Somerfield closely.

Late on Friday night, Violet Acquisitions, the bid vehicle used by rival consortium Apax, Barclays Capital and Robert Tchenguiz, made a formal £1.8bn offer for the grocer after a seven-month auction process. Violet is the name of one of Tchenguiz's daughters.

The bid was finally recommended at 10pm after a day of twists and turns in keeping with the tortuous process of the past few months that saw Iceland's Baugur group withdraw after executives had to focus on clearing their names in a court case.

Violet was forced to make two statements of intent on Friday after it struggled to complete its financing in time for a 5pm "put up or shut up" deadline imposed by the Takeover Panel. In the end the panel extended the deadline and the bid now has to be agreed at a Somerfield extraordinary general meeting at the end of November.

At £1.08bn, Violet's bid comes in at a 25 percent premium on Somerfield's share price at the turn of the year and chairman John von Spreckelsen will retire, to be replaced by Debenhams chairman John Lovering -- unless another bidder crashes the party.

When London & Regional pulled out of the running last week, Ian and Richard Livingstone, who have a personal fortune thought to be about £250m, left the door open to table a counterbid should another consortium make an offer.

Sources close to L&R suggest this proviso was "made for a reason" and that the brothers, backed by Nomura bank, will be considering their options over the next few days.

Their bid collapsed with the withdrawal of United Co-op, which was due to buy 500 Somerfield stores. Any counterbid would need to be well clear of the 197p tabled by Violet.

L&R is also understood to be closing a further £200m of deals in continental Europe. It is in advanced discussions with tenants looking to lease space in the old Marks & Spencer head office on Baker Street, which is being converted into a mixed-use scheme scheduled to open in 2007. At 500,000 sq ft, it is one of the largest signature buildings in London.

L&R owns three Hilton hotels in Britain, one in Germany, and the Empire cinema in Leicester Square, London. It also has property in Sweden, Finland, and other Scandinavian countries. Ian Livingstone, who trained as an optician, also owns the David Clulow optician chain, while Richard is a qualified chartered surveyor.

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Copyright (c) 2005, The Business, London

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SOF,

Source: Sunday Business

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