SEVERAL private equity players are lining up for a bidding war over DFS, the furniture chain owned and chaired by Conservative party donor Lord Kirkham.
European rivals Permira, Cinven and Advent International are in the running for the sofa superstore in a development that could steer it away from a mooted stockmarket flotation.
The news comes hot on the heels of a flurry of private equity deals worth a total of £1.9bn, including KKR’s £955m buyout of Pets at Home last week. It is the latest sign that buyout activity is roaring back to life after 18 months of hibernation, with dealmakers turning to private sales rather than initial public offerings to exit investments.
Permira has roped in retail veteran John Lovering to act as a figurehead for its offer. Lovering, who was appointed as chairman of pub group Mitchells & Butlers last week, will not contribute significant capital if a bid materialises but will lend expertise garnered during his six-year stint as chairman of Debenhams, the department store. He would likely take an executive position at DFS after the deal’s completion.
One source said there was “a bunch” of other people running the rule over DFS, including Cinven and Advent. Permira has taken advice from Japanese investment bank Nomura, while Lord Kirkham has Goldman Sachs on board.
Goldman Sachs took an initial sounding from interested parties on Friday. Permira, Cinven and Advent declined to comment.
Lord Kirkham stands to net a huge windfall from the sale of his controlling stake, which he paid £507m for when he took the company back into private hands six years ago. Having started DFS from a small site in Yorkshire 40 years ago, however, the 65-year-old is said to be reluctant to relinquish his involvement. He may insist on a boardroom position under the terms of a deal.
An IPO is now unlikely given the strength of interest from potential buyers, one insider added.
In accounts to be filed, DFS will reveal a 42.1 per cent rise in pre-tax earnings to £86.7m for 2009 and a £11.3m bonus for Lord Kirkham.