Asda interested in buying Iceland

British media are reporting that the UK’s second-biggest supermarket chain, Asda is interested in buying the nearly 70 percent stake in Iceland Foods owned by the bankrupt estate of Old Landsbanki from Iceland, the country.

The country’s biggest retailer, Tesco is also said to be interested in buying up Iceland — as are third and fourth place retailers, Sainsbury’s and Morrisons. There is considerable pressure on Old Landsbanki to get a good price for its stake in Iceland, as the money is needed to help pay off the Icesave debt. A bidding war between Britain’s biggest supermarkets could drive up the price.

The resolution committee of Old Landsbanki holds 67 percent in Iceland, which is a nationwide supermarket chain best-known for its town and city centre locations and its emphasis on low prices, especially on frozen goods. Iceland may not compete with the Big Four (who have over 75 percent market share); but it is by far the biggest company in its particular niche and the business is performing well. The Landsbanki stake was taken from BG Holding when its parent company, Baugur Group went bankrupt.

The Financial Times and Bloomberg claim that a bidding war is in the offing; saying that Asda has appointed Lazard, one of the world’s biggest financial advice agencies to help. Asda is owned by Wal Mart and recently bought its smaller rival Netto.

An information booklet about Iceland is due to be sent to interested parties at the end of the month.

Malcolm Walker, the founder and chairman of Iceland, is also interested in owning more of his company by buying the Landsbanki stake. He offered a billion pounds (ISK 130 billion) last year and that offer is still on the table. He also has the option of equalling the highest bid when the sales process formally gets going.

Economists questioned by RUV believe it is not unlikely that the Landsbanki share in Iceland will go for GBP 1.5 billion – 1.8 billion — which is up to ISK 337 billion.

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