‘Somerfield deal is on’

The Co-operative Group’s ambitious £1.7 billion deal to buy the Somerfield chain of 900 food stores is almost complete and will be finalised in the next fortnight, according...

The London-based news-wire reports that — “according to sources close to the transaction” — the private equity consortium led by Apax Partners is close to reaching a deal with the Group and says a briefing on Dow Jones indicates that a deal could be signed at the beginning of July.

However Thomson Merger News said there are apparently still issues to be worked out before the deal can be announced. The Co-operative Group declined to comment on the state of the negotiations, though a spokesman told the News the proposed deal was hugely complicated and compared the process to buying 900 houses simultaneously.

The Group has been working through due diligence procedures for around three months, but Chief Executive Peter Marks (pictured) told the News when the announcement of the Group’s interest in the chain was first confirmed in April that the society would walk away from the proposed deal unless the price is right.

Since then, it has emerged the Group is the only serious bidder for Somerfield and Thomsons Merger News reported that attitudes during the take-over talks have been “friendly”.

Mr Marks has stated publicly that any agreed purchase price would be “nearer the £1.5bn mark” than the £2bn suggested by industry and media analysts.

The consortium comprising Barclays Private Equity, property tycoon Robert Tchenguiz, Kaupthing Bank and Apax, bought Somerfield for £1.1bn in 2005.

Since then, the business has seen a major restructuring and the consortium was reportedly looking to sell it for £2.5bn when the company was put on the market in January.

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