£50m race for Londis nears finish

CONVENIENCE store chain Londis, at the centre of a £50 million takeover auction, is ready to announce its preferred buyer. There is a shortlist of three.

Irish retailer Musgrave, which owns Budgens in the UK, the Co-op and off-licence chain Thresher are thought to have emerged as front-runners for the independent group, which has 2,000 stores.

A sale will trigger windfalls of tens of thousands of pounds for Londis shopkeepers, who all own shares in the company.

Several High Street food groups - including Big Food Group, which owns Iceland, Cost Cutter, Somerfield and Nisa-Today - have expressed interest, but Musgrave has been seen as the favourite. Its £40 million bid failed last year when it emerged that it would have resulted in Londis's four directors receiving a total bonus payment of £20.4 million.

But those directors decided earlier this year to waive the bonus deal in exchange for a total payment of £2 million, which put the sale process back on track.

Trading at Londis, led by Peter McNamara, is believed to have been strong since last summer, when Musgrave agreed the price. Observers believe it is now likely to fetch closer to £50 million.

Musgrave may be the front-runner, but the Co-op with its mutual history could be attractive to the group's owners.

Thresher, which is owned by Guy Hands' investment company Terra Firma, is a surprise candidate, though it has recently started selling convenience food.

Price alone is unlikely to win the day since Londis shareholders will still buy their produce from the new owner and will be concerned to ensure they can do business with it.

Londis adviser KPMG Corporate Finance has tried to orchestrate a structured deal, but it is possible that a hostile bidder could yet emerge for the business.