Five big equity groups face off for Matalan

Published on Friday 20 November 2009 21:20

UP TO five heavyweight private equity groups are believed to have placed bids for Matalan, the discount clothing chain.

John Hargreaves, the group's founder and sole shareholder, put the chain up for sale earlier this year, sparking an auction with a price tag expected to reach 1.5 billion.

Private equity buyers TPG, Blackstone, Warburg Pincus, BC Partners and Advent International, have all reportedly placed bids for the company.

Matalan, which declined to comment yesterday, has shown resilience in the recession as its cut-price clothes and homewares attract cost-conscious customers.

Its operating profits rose to 102 million in the year to 28 February, up from 89.4m a year earlier. Like-for-like sales lifted 8.2 per cent in the first 14 weeks of the current financial year. If completed, the sale will see Hargreaves and his family gain hundreds of millions of pounds. The 65-year-old took the company private three years ago in an 827m deal, which was backed by debt of 410m.

Bids had to be placed by Tuesday, and while the board of Matalan is believed to have already met to discuss the short list, a deal is not expected until the new year, so bidders can assess its Christmas trading figures.

Advent International is believed to be a leading contender, with Richard Baker, the former boss of Boots and an operations partner at the private equity company, seen as a possible new chief executive.

Matalan was established by Hargreaves in Preston in 1985, inspired by cut price stores in the US. It grew to a chain of 50 within a decade. Currently there are just over 200 stores, but the group has major expansion plans.