Woolworths Rejects Bid From Iceland Foods as Too Low

Woolworths Rejects Bid From Iceland Foods as Too Low

Aug. 17 (Bloomberg) -- Woolworths Group Plc, whose U.K. stores sell goods from appliances to candy, said it rejected a takeover offer from Iceland Foods Ltd. because the bid was too low and would have saddled Woolworths with pension liabilities.

The company also turned down the offer by Iceland Foods, owned by Baugur Group Hf of Iceland, because it involved ``complex restructuring,'' the London-based company said in an e- mailed statement today. Iceland Foods founder Malcolm Walker and Baugur made a formal offer for Woolworths' 815 stores, the Sunday Telegraph reported, citing unidentified people close to the plan.

The proposal ``undervalued the assets of the company and potentially would have adversely impacted the group's existing funding arrangement,'' Woolworth said in a statement distributed by Tulchan Communications. ``There is a considerable opportunity for the group to build a sustainable value retail proposition based primarily on its small to medium sized stores.''

Woolworths ousted Chief Executive Officer Trevor Bish-Jones in June after same-store sales dropped over four fiscal years as fewer shoppers visit British town-center stores. The company appointed Steve Johnson as CEO on Aug. 12, betting he can lead a turnaround similar to the recovery he oversaw as head of home- improvement retailer Focus DIY. Johnson takes over in September.

Falling Stock

Woolworths has fallen 48 percent this year in London, and traded at 6.65 pence a share on Aug. 15, giving it a market value of 97 million pounds ($181 million).

Baugur wasn't immediately able to comment on the Woolworths statement, Ray Jones, a security officer at Baugur's U.K. headquarters, said today by telephone. The company may make a statement tomorrow, Jones said.

Merrill Lynch & Co. cut its recommendation on the stock to ``underperform'' from ``buy'' last month, citing the company's debt. The retailer sold four London stores to John Lewis Partnership Plc's Waitrose Ltd. for 25.5 million pounds in June.

The retailer was founded in 1909 as part of its U.S. parent's expansion and is not related to Sydney-based Woolworths Ltd. or Woolworths Holdings Ltd., located in Cape Town, South Africa.

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