Woolworths rejects offer from Baugur consortium

Woolworths has rejected an offer for its retail stores from Iceland

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Woolworths has rejected an offer for its high street stores from Iceland chief executive Malcolm Walker and a Baugur consortium.

According to reports this weekend Walker made an approach to Woolworths chairman Richard North on behalf of a consortium of investors including Baugur to buy the retail division for "tens of millions of pounds".

However Walker's offer was conditional on the Woolworths group retaining most of the company's debt and covering its pension deficit.

Woolworths said yesterday that it had rejected the proposal for a number of reasons including that is undervalued the assets of the company and adversely impacted the group's existing funding arrangements. It also said that it would involve a "complex restructuring" which in "practical terms was not achievable". Woolworths added that covering the pension deficit for employees of the business was not acceptable to the board."

Last week Woolworths appointed former Focus DIY chief executive Steve Johnson as its new chief executive, replacing Trevor Bish-Jones who has stepped down from the board.

Woolworths said it believes there is considerable opportunity for it to build a sustainable value retail proposition based primarily on its small to medium sized stores. It said there was also opportunity for improved stock management in the areas of ordering, weeks of stock cover held and availability.