Advent puts Matalan bid on its calendar

Nov 16 2009 by Peter McCusker, The Journal

RICHARD Baker, the former boss of Boots, is reported to be leading a £1.5bn bid for Matalan by the owner of discount chain Poundland.

Mr Baker, who made an estimated £6.5m when Boots was taken over in an £11bn private equity deal in 2007, recently joined buyout firm Advent International as an operating partner.

The Sunday Times yesterday said Advent planned to launch its offer this week ahead of a deadline set by Matalan founder and owner John Hargreaves, who put the Lancashire-based company up for sale last month.

Advent is likely to face stiff competition from a number of heavyweight private equity funds, including TPG, Blackstone and CVC. However, Advent’s chances of success are boosted by its experience of the discount sector, having invested in Poundland in 2002. Other UK investments include clothing chain Fat Face and warranties firm Domestic & General.

Mr Baker, who is also non-executive chairman of health club chain Virgin Active, joined Boots from Asda, where he was chief operating officer.

Last month it was reported that Matalan chief executive Alistair George had spoken to a number of interested parties in the 203-store firm, although no bid was on the table at that stage.

A deal would net hundreds of million of pounds for Mr Hargreaves, who took the business private in an £827m deal backed by £410m of debt three years ago. Matalan’s operating profits reached £102m in the year to February 28, up from £89.4m a year earlier.

Mr Hargreaves opened the first Matalan store in Preston in 1985, taking inspiration from low-price, out-of-town retailers in the US. By 1995 there were 50 stores across the UK.