Home Retail Group could see rival bid from Clayton Dubilier & Rice and Terry Leahy
Former Tesco CEO Terry Leahy and the buyout group Clayton Dubilier & Rice (CDR) are thinking about making a counter bid for Home Retail Group [LON:HOME], The Times reported.
The newspaper cited market sources who said Leahy and CDR would probably be among several private equity firms considering making offers for HRG. The article cited Apax Partners and Apollo Global Management as two possible private equity bidders, without attributing the claim to a source.
The item said it is understood that Leahy, a consultant with CDR, worked on whether a deal would be financially feasible late in 2015.
It remains to be seen whether CDR and Leahy will make an offer for HRG, which rebuffed an approach in November last year from the UK-based supermarket group J Sainsbury [LON:SBRY]. Sainsbury’s disclosed the bid approach this week.
One retail CEO cited by the report said rival retailers and other investors could be considering options. HRG has significant cash and a credit book valued at about GBP 579m that could easily be securitised, the CEO said, adding that the possible securitisation would make funding a takeover relatively easy.
One private equity investor quoted in the report said, however, that he thought Sainsbury’s is in the pole position to acquire HRG. The investor did not think HRG’s numbers make sense for buyout groups, adding that his firm considered a deal in January but found it difficult to make a financial case for an offer. HRG’s Argos unit would need to demonstrate much better sales growth to give the returns that his firm would expect, the investor added.
Leahy and CDR refused to comment, the item said.
The Times