Bridgepoint and Phoenix set to exit Lee Cooper

Discount retailing chain Matalan is set to buy the denim-clothing manufacturer for £40m.

Bridgepoint Capital and Phoenix Equity Partners, are expected to sell Lee Cooper, Europe's second largest manufacturer of jeans and other denim clothes to UK discount retailer Matalan later this month.

The two firms backed an MBO of the company in 1994 and they have a combined shareholding of just over 50 per cent, with the balance held by Hong Kong textiles company Wing Tai and the Djilani family [30 and 17 per cent respectively].

The company has been for sale for 4 months and had attracted interest from both other private equity firms and from US-denim producer VF Group. Matalan, an increasingly aggressive discount retailer, managed to secure exclusive negotiation rights last month however. Analysts see this as a strategic move by the company to acquire its own brand and manufacturing facility as it pushes further into clothes retailing.

Although no price has been agreed yet, it is expected that Matalan will pay circa. £40m, although earlier estimates had valued Lee Cooper at £50m. Its last set of results had shown an increase in turnover to £62m [up nearly 10 per cent] but a slight drop in operating profits to £5.6m [down from £5.7m the year before] on account of increased marketing spend.