VendexKBB, the Dutch retail group, is poised to announce within days that it has entered exclusive sale talks with one of two venture capital suitors, according to a person following the negotiations.
An alliance of Kohlberg Kravis Roberts, the US-based private equity group, and Alpinvest, the Dutch private equity house, is competing with a partnership of UK-based Cinven and Permira to buy the group, which is scheduled to report full-year earnings on April 6.
Vendex said last month it had received indicative non-binding offers from interested parties of about €14 per share, valuing the group at €1.3bn ($1.6bn).
'I would expect the board to come with an announcement within days,' the person said. He dismissed concerns expressed by some investors that the final offer price would fall below the indicative bid level.
Vendex´s potential new owners are expected to retain the services of senior management - including Ed Hamming, Vendex chairman - although the precise role they will play is unclear. '[Current management] will all have a role in the company,' the person said.
A final offer for the group would be subject to the completion of due diligence, much of which has already been done by both bidding parties, the person said.
While price is crucial, another factor weighing in the minds of Vendex management would be the certainty of a deal and the buying party´s access to finance - notably commitment letters from banks, said the person. The bidding parties would want to be sure the bulk of due diligence was complete before exclusive talks began.
Vendex shareholders, including K Capital of the US, have long been lobbying for an external financial injection, primarily to turn round the company´s loss-making Vroom & Dreesmann department store business. In a trading update last month, Vendex reported a 'difficult fourth quarter' with flat sales of €1.18bn, reflecting unfavourable market conditions. Excluding acquisition effects, turnover fell 2.6 per cent.
Fourth-quarter sales at V&D fell more than 9 per cent, partly due to mark-downs on fashion lines.
The department store chain is expected to report an operating loss of between €30m and €50m for 2003. Vendex will take a €80m charge for restructuring V&D, it said last month.
Source: Financial Times