Woolworths' shares soared by 11% to 7.39p yesterday amid hopes that Iceland chief executive Malcolm Walker and a Baugur consortium would return with an improved offer to buy the value chain's high street stores.
Woolworths rejected a £50 million takeover approach earlier this week, which was conditional on the Woolworths group retaining most of the company's debt and covering its pension deficit, estimated to be £48.2m at the company's year-end.
But according to reports the pension deficit figure could be nearer £100m when Woolworths completes a triennial review of its pension scheme within a few weeks.
Woolworths said yesterday 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.