Spar franchise owner BWG Group has selected the British private equity house ECI Partners as preferred bidder for its Cheshire-based off-licence franchise, Bargain Booze.
While the Walkinstown-based group has not yet entered exclusive talks with ECI, it is understood the price under discussion is in the region of £70 million sterling (€103 million). Such a sum would be at the lower end of the £70 to £80 million range mooted in June when BWG circulated an information memorandum.
However, it would be more than enough to clear BWG's outstanding debts of some €90 million. This is a central objective of the sale process, which comes in advance of the likely exit from BWG of its 65 per cent owner, the British-owned venture capitalist firm Electra Partners.
Electra set out a five-year investment timeframe in 2002 when it backed a €220 million management buyout of BWG. Clearing the group's debt through the sale of Bargain Booze would clear the way for a smooth change of ownership in 2007.
BWG has said in recent weeks that the chain, which has 550 franchise outlets in England, is not core to its business. While value of the chain's retail sales rose by 10.5 per cent in 2004 to €484 million, BWG's earnings from the unit are not known.
There was no comment from ECI. However, it is understood that the firm's Manchester office has expressed a definite interest in the business and has carried out an initial due diligence examination. In addition, the business is said to fit well with ECI Partners' investment model and with the scale of deal that it typically contemplates.
BWG's spokesman declined to comment on the substance of a report naming ECI in the Manchester Evening News.
"Negotations on the sale of Bargain Booze are at a confidential stage and we are very pleased with the progress of the sale process. But, as previously advised, the process is unlikely to complete before October."
Assuming that BWG agrees to deal exclusively with ECI Partners, the company is likely to undertake a final due diligence exercise within the next month. Other bidders are believed to have included Lloyds Development Capital and Barclays.
Apart from Electra, BWG's other owners include a management team led by Leo Crawford (15 per cent) and John Clohisey of Newhill Ltd (20 per cent), whose chain of 115 Spar stores was acquired for €45 million in the 2002 buyout.
BWG owns and operates 140 Spar and Mace stores in the Republic, 507 franchise stores and 26 cash-and-carry outlets.
Its subsidiary, Appleby Westwood, has another 340 franchise Spar stores in south west England.
