Primark set to grow as ABF bags Littlewoods for £409m

Published on Monday 11 July 2005 12:21

ASSOCIATED British Foods today confirmed it was buying the Littlewoods store chain for £409 million in a deal that will see part of the 120-strong estate converted to ABF's Primark format.

ABF, owner of the Twinings tea and Silver Spoon sugar brands, said it was confident it would offload the remaining selling space to other retailers.

Today's deal will mark the phasing out of the Littlewoods name on the high street.

The Barclay brothers, owners of the Edinburgh Evening News, The Scotsman and Scotland on Sunday, have already sold the Index catalogue stores which were previously part of the Littlewoods group. However, they intend to hold on to the Littlewoods home and online shopping business, an operation with UK sales of more than 2 billion.

Primark is pursuing a strategy of expanding geographically and increasing the average size of its shops. Prior to today's deal it had 122 stores and more than 2.4 million square feet of retail selling space.

Parent group ABF said it would retain some 40 per cent of the current retail selling space of the Littlewoods portfolio.

"Those stores selected will best suit Primark in terms of location and size," it added.

In a statement to the stock exchange, ABF said the Littlewoods outlets would continue to trade for the period until March 2006 with the group's "full backing". It added that the retail restructuring specialist, Hilco, had been retained to manage these operations on behalf of ABF until then.

Commenting on today's deal, ABF chief executive George Weston said: "This is a unique opportunity to acquire a portfolio of large stores in attractive high street locations.

"It will bring Primark to many towns and cities where it is currently not present."

The acquisition of the stores chain comes almost 70 years after Littlewoods opened its first outlet in Blackpool in 1937.

Littlewoods, which was acquired by Sir David and Sir Frederick Barclay in October 2002, began the auction process earlier this year after receiving several informal approaches for the stores.

It is also in the process of closing 126 Index branches with the loss of about 3200 jobs. The group sold the remaining 44 sites in the Index estate to Argos, which is owned by FTSE 100 company GUS.

Primark is expected to keep the larger of the Littlewoods sites - between 25 and 40 shops - before selling the rest.

Rival fashion store New Look, which had earlier been involved in the auction process, and Arcadia owner Philip Green are likely to be among those interested in the available stores.

Primark plans to add a further six outlets by February.