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Iceland CEO Malcolm Walker


To believe the headlines over the last few months you would think the battle to acquire frozen foods specialist Iceland is heating up, but founder and CEO of the business Malcolm Walker says otherwise.

Since UBS and Merrill Lynch were brought in to find a buyer in May the process to put the business up for sale has been very slow, he told Retail Gazette.

And according to the charismatic retail boss, it is highly unlikely that another supermarket will be acquiring Iceland any time soon.

“I don’t think supermarkets are circling around for an acquisition,” Walker explains.

“I think they would like a few shops, but Iceland is not going to be broken up so this is not a possibility.”

Morrisons and Asda are just two of the names that have been linked with a takeover of the business, which creditors of failed Icelandic bank and majority Iceland shareholder Landsbanki and trying to push through as soon as possible.

Reports suggest that supermarkets have been lining up bids of around £1.6 billion, and with net profit before tax of £155.5 million and sales over £2 billion last year Iceland is an attractive proposition, but Walker claims these stories are wide of the mark.

While the rumours have been circulating, the CEO, who currently holds a quarter of the company’s shares, has been speaking to banks and investors with a view to making a bid of his own.

Instead of seeing Iceland dished up for the hungry ‘big four’, Walker would prefer to retain control of the company he established 40 years ago, was fired from in 2001 and famously returned to after a Baugar Group-led consortium arrived to take the business private in 2005.

The team of the 65-year-old Yorkshireman, who recently completed a charity climbing trip of Mount Everest, have pre-emption rights, meaning that if anyone puts in an offer that is accepted by Landsbanki’s creditors and they can match it then the business is theirs.

“I have no idea if I’ll be the next owner, but I have the opportunity,” he states.

“Naturally, we have been talking to a number of banks regarding funding for a takeover as we must be prepared if we need to counter an offer.”

Walker and his business partners will of course have their financial limit, and he admits that if someone offers “a huge amount of money” there is the possibility that it will be accepted.

What seems more likely, considering the agreement in place and the enthusiasm that Walker has for the Iceland brand, is that the retailer will remain an important part of the supermarket landscape for some time yet.

“We understand the business, we live and breathe the business and we can grow it further,” he argues.

“If anyone else was to come in I don’t suppose they would have a clue really.”

And perhaps he has a point. The business has grown sales every year under his leadership and annual profits have increased each year except one.

The four years when he was away from the business, a time when he founded a second frozen foods specialist Cooltrader, which is now part of the Iceland Group, Iceland went through the mire.

Renamed Big Food Group, the company lost focus, saw sales fall and, as a result, slipped down the grocery league table in terms of market share. It is now moving in the right direction again, and the latest Kantar Worldpanel data indicated that it holds 1.9 per cent of the overall grocery market and is clearly the number one frozens specialist.

“The business wouldn’t take a different direction under my ownership – it would be more of the same,” he states, before adding slightly tongue-in-cheek that “brilliant management” is the secret to the company’s success over the years.

“We’ve done well not just in the last 12 months, but for 36 years - the four years I was out of the business - it fell apart,” he asserts.

It will be hard to stop the speculation while the company officially remains up for sale, but Walker believes that the brochures will be sent out to potential purchasers in around eight weeks once due diligence has been completed.

Morrisons and Asda will both see acquisitions of Iceland’s stores as a great opportunity to increase their presence both in convenience retailing and in the south of England where they are under-represented, but it is difficult to see them mounting a bid for the business in its entirety.

The current CEO does not want to see the retailer he established in the small Shropshire town of Oswestry in 1970 broken up, and he is confident he will be in a position to stop this from happening.

“We will sit and wait and see what happens, and if someone finally puts in an offer and we can match it, the company is ours.”

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Published on Friday 01 July by Editorial Assistant

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