Apax agrees Somerfield terms

Apax Partners, Barclays Capital and a property investment vehicle controlled by the Tchenguiz family have finally agreed a 197p per share price deal with UK supermarket chain Somerfield, which values the company at £1.08bn.

The shareholders have been on the back foot in recent months because rival bidders have dropped out of the process, leaving Apax and its associates as the only remaining stalking horse. In the end, the consortium prolonged the uncertainty until it had hammered out a solution to a thorny pensions issue.

The deal was eventually announced on October 17 on the back of an extension that was approved just 10 minutes before a Takeover Panel deadline was due to expire. The whole convoluted process began in February, when Baugur made an initial approach for the company. Apax later joined the bid, only for the group to fall apart because Baugur’s founder and CEO Jon Asgeir Johannesson was charged with embezzlement.

London & Regional, a real estate group, and retailer United Co-operatives pulled out of the race in the summer after rumours that Tesco and Wal-Mart were preparing to join the fray.

The final bid represents a premium of 21.6% to the closing price of 162p per Somerfield share on February 8, the last business day prior to the commencement of the offer period. It is a premium of 35.7% to the average closing price of Somerfield for the six months to the same date.

Debt financing for the proposal is being arranged and underwritten by Barclays Capital, Citigroup and Royal Bank of Scotland. Citigroup and Lehman acted as joint financial advisers and brokers to newco Violet Acquisitions. Somerfield was advised by Deutsche Bank and Dresdner Kleinwort Wasserstein.