Iceland sales figure rises so potential bidders will have to stump up more

Published on Monday 23 May 2011 21:33

POTENTIAL bidders for frozen food retailer Iceland may have to dig deeper after it emerged as one of the strongest performing chains in latest industry sales figures released yesterday.

The grocery market update from Kantar Worldpanel showed that Iceland's sales increased by 5.7 per cent in the 12 weeks to 16 May, outperforming the 4.8 per cent jump seen across the grocery sector during the quarter.

Morrisons, the UK's fourth-largest supermarket, is understood to be one of the potential buyers mulling a 1.5 billion bid for the chain but the strong performance could see the price tag raised.

Iceland now accounts for 1.9 per cent of the grocery market and a takeover could help Morrisons' expansion ambitions.

The Kantar figures also reveal that discount supermarkets Aldi and Lidl saw their sales grow by 15.4 per cent and 16.1 per cent respectively as consumers continued to tried to mitigate the impact of rising inflation, tax increases and spending cuts. German chain Aldi now has a record 3.4 per cent market share in food and drink sales.

The quarterly figures were boosted by recent hot weather, the royal wedding and Easter with sales up 7.8 per cent in the four weeks to 15 May.

Edward Garner, communications director at Kantar, said: "A rising tide lifts all boats and the top retailers performed well this month buoyed by the market growth rate."

Waitrose was among the top performers, with sales up 8.8 per cent, increasing its market share to 4.3 per cent from 4.1 per cent. Supermarket leader Tesco increased its market share to 30.7 per cent from 30.6 per cent, while Morrisons grew to 11.9 per cent from 11.8 per cent but Asda's total share, including its recently acquired Netto stores, fell back from 16.8 per cent to 16.6 per cent. Sainsbury's was unchanged at 16.3 per cent.

Iceland, which has 750 stores in the UK, has been put up for sale by officials winding up Landsbanki, the failed Icelandic bank that took control of the chain in 2008. Earlier this month, UBS and Bank of America-Merrill Lynch were appointed to auction Landsbanki's 67 per cent stake, which it inherited following the collapse of Icelandic investment group Baugur.

Although Morrisons has been tipped as one of the trade buyers who will be looking closely at a potential acquisition, earlier this week Malcolm Walker - the Yorkshire-born founder of Iceland - also said he wants to buy the stake.

It is understood Walker tabled a 1bn bid for Iceland last year but the approach was rejected at the time.

Walker, who along with management owns 26 per cent, has the right to match any offer for the company.

Private equity companies likely to run the rule over the business include Apax, BC Partners, CDR and Lion.Other supermarket chains, including Asda, are also likely to consider a bid but any involvement of one of the big four players would almost certainly attract the attention of the competition authorities.

Earlier this year Asda was forced to sell 25 per cent of the stores it acquired following its 800m takeover of discount rival Netto.