Morrisons is leading race for Iceland

Elizabeth Fournier
SUPERMARKET chain Morrisons is being touted as the frontrunner in the race to buy into rival Iceland, after majority owner Landsbanki officially launched a sales process for its holding in the company.

The Resolution Committee for Landsbanki said last week that according to advisers UBS and Bank of America Merrill Lynch, “market conditions are currently favourable” for the sale of its 67 per cent stake in the company.

Analysts have valued Iceland, which operates around 780 stores across the UK, at about €1.5bn.

Buying the portfolio would help achieve Morrisons chief executive Dalton Philips’ aim of strengthening its presence in London, and expanding into the convenience store market.

“Morrisons is the only market buyer that makes sense, though it may still come up against competition issues,” said an industry source.

If Morrisons were to launch a bid, it is likely to face opposition from the company’s management, led by chief executive Malcolm Walker.

Walker, who owns 26 per cent of the retailer, bid around £1bn for the remainder last year and is likely to stay in the running as the auction progresses.

Any potential bid by Morrisons would be complicated by the fact that both Landsbanki and the Iceland management have hired the supermarket giant’s two go-to banks as advisers.

The Landsbanki committee has mandated Bank of America Merrill Lynch, while the stores’ management is advised by Rothschild, which worked for Morrisons on its takeover of Kiddicare in February.

Adding Iceland’s current market share of close to two per cent would take Morrisons within spitting distance of closest rival Sainsbury’s, which has a 16.3 per cent UK market share.

A spokesperson for Morrisons had no comment on rumours of a bid.

Sainsbury’s also declined to comment on speculation that it might be interested, but it is seen as the least likely potential bidder, after it looked at Iceland’s portfolio in 2005 but only bought one store.

Tesco and Asda said they did not comment on market speculation.


● Founded in 1899 as a Bradford market stall by William Morrison

● Runs 442 UK stores

● Paid £3bn for Safeway in 2004 to expand into the south of the UK

● Bought 38 Co-op / Somerfield stores in 2008 for £223.1m

● Has an 11.9 per cent market share as of April 2011

● First store opened in Oswestry, Shropshire in 1970

● Runs around 750 stores across the UK

● Headed by Malcolm Walker, who founded the company and returned to its helm in 2005.

● Taken private in 2005 following four-year period of declining profits

● Has a 1.9 per cent market share as of April 2011