The Baugur-backed consortium and Woolworths chairman Richard North are both open to discussions about the terms of the bid. North has said previously that the original offer, thought to be about£50 million, undervalued the retailer and would leave the parent company with unacceptable pension and lease liabilities.
A meeting between Walker and North has yet to be arranged to discuss new terms, but it is understood that Walker wants it to happen in the next few weeks.
However, the pension and lease liabilities are likely to remain a sticking point and there are doubts about whether the deal will take place. Woolworths confirmed it had begun its triennial actuarial valuation of its pension scheme in March and expects to complete it within weeks. It is understood that the deficit could have increased from£48.2 million to almost£100 million.
A source close to the consortium said that if more money is offered, the consortium would insist on shouldering less of Woolies’ existing debt. “It needs to be the right solution for both parties and discussions need to take place,” said the source. “The deal is about taking over a business at the right price. It’s not an easy business to turn around.”
Walker, who was not available for comment, is keen to take Woolworths back to basics and restore its appeal as a traditional variety store. Adopting a similar strategy he employed to turnaround frozen food retailer Iceland, Walker would modify the offer to focus on key categories, cut costs and improve staff morale.
- The sale of Baugur-owned Julian Graves is understood to be nearing completion. Interested parties are thought to include the existing management of the fruit and nut retailer, led by managing director Nick Shutts, and competitor Holland & Barrett.
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