Permira confirms £1.5bn Debenhams move

In private equity’s latest foray into the UK retail sector, Permira has tabled an indicative £1.54bn all-cash offer for Debenhams, the department store chain.

UK retailers remain high on the agenda of private equity firms. Department store chain Debenhams looks set to become the latest listed company to succumb to a private offer after Permira confirmed the details of a 425 pence per share offer.

 

The offer, pitched at a 25 per cent premium to the company’s closing share price on Friday, values the business at £1.54bn. In a statement this morning, Debenhams said “the Board of directors has agreed that the executive directors may work with Permira on this indicative proposal. This indicative proposal is preliminary and subject, inter alia, to due diligence and financing and, consequently, there can be no certainty that a firm offer will be made.”

 

In the half year to 1 March 2003, the company reported a 5.8 per cent increase in total sales to £992.1m, with like-for-like sales up 3.5 per cent. Pre-tax profits were up 4.8 per cent at £96.5m, whilst earnings per share increased by 7.7 per cent to 19.2 pence.

 

The company also recently announced details of its next three year phase of its strategy including a £430m investment programme, which will add a further nine new stores and create around 2,000 jobs.

 

Debenham was alerted to Permira’s interest last week. Permira declined to comment.

 

News of the deal comes on the same day that fellow UK department store Selfridges accepted an offer from Canadian billionaire Galen Weston. Other groups in the sector to have been tempted by take-private transactions include Harvey Nichols, which voted for a delisting in December.

 

There is also continuing interest in UK supermarket Somerfield, which is the subject of an offer from John Lovering, while Safeway, previously the subject of an offer from Kohlberg Kravis Roberts, is still in the midst of a takeover struggle between several of the UK’s leading supermarket groups.