Londis UK is likely to begin talks with Musgrave and other suitors for the convenience store co-operative after consultants recommended to the group at the weekend that it should sell up or merge with a similar business.
KPMG delivered the results of its strategic review to the Londis board on Saturday. The review looks at six options open to its 2,000 shopkeeper-shareholders. While the company would not comment on the review's content yesterday, it is understood that it recommends either a sale or a merger of the group.
The review's outcome means that Londis UK will have to re- enter negotiations with retail franchiser and grocery distributor Musgrave in the near future. The Irish company is one of up to nine potential bidders for the co-op.
The Big Food Group (BFG) - which owns the Iceland chain - Somerfield, Nisa and the Co-operative Group are also said to be interested in Londis.
Musgrave's €57 million bid for the UK co-operative was derailed on the verge of completion last December when the board withdrew its support. A number of shopkeepers were protesting at the fact that the executive directors would have shared €28.5 million, while individual shareholders would have received just over €14,000 each.
BFG offered a similar sum for the group but held out more favourable terms to the shareholders, which in turn caused the board to withdraw its recommendation for the Musgrave offer and commission the KPMG review.
While Musgrave had to withdraw its offer, its chief executive, Mr Séamus Scally, subsequently stressed that it was still interested in buying Londis. The Cork-based company would not comment yesterday.
Musgrave is known to have met KPMG during the review process and owns British chain Budgen. It believes that the UK convenience store market is not as developed as its Irish counterpart.
Any deal with Londis will require the support of 75 per cent of the Londis shareholders. To win this, the executive directors are likely to have to accept a reduced share of the sale price.
Reports in the British media yesterday indicated that some shareholders favour allying the business with rival network, Nisa. This would probably involve a paper-for-paper merger rather than an actual sale.
