PE firms target Big Food

KKR and CVC are running the rule over struggling food retailer Big Food Group.

Big Food Group, the UK food retailer which counts frozen food retailer Iceland among its interests, is the subject of bid speculation from two of the most active firms in the US and European market.

US buyout firm Kohlberg Kravis Roberts and CVC Capital Partners, currently the most active buyout investor in Europe, are in negotiations with the food retailer, which has seen its shares nosedive since it unexpectedly announced in July that Iceland would report a loss for the first half of the year. According to the Wall Street Journal, both firms are looking at a possible management-backed buyout of the group, which currently has a market cap of £145m.

The news has boosted Big Food’s share price, which increased from a close last night at 38.5 pence to trade at 43 pence a 10 per cent increase. Prior to the profits warning, Big Food Group was trading at around 100 pence. On July 25, in a move that City had not anticiptaed, the group said Iceland was likely to post an eight per cent loss in the first half.

CVC’s involvement suggests the group retains a keen interest in investing the European retail market. In early September the firm acquired struggling Spanish retailer El Árbol from Casino, the French group. In April, the firm acquired six retail chains from Vendex KBB.

KKR has also been active in Europe this year, completing transactions with a total value in excess of E7bn.