Apax consortium to auction UK supermarket for £2.5bn

After postponing a recapitalisation last year, the consortium which bought UK supermarket Somerfield more than two years ago has decided to auction the business.

The syndicate of European buyout firm Apax Partners and investment bank Barclays Capital as well as UK billionaire Robert Tchenguiz is selling UK supermarket Somerfield for £2 billion ($3.9 billion ; €2.68 billion) to £2.5 billion after receiving unsolicited approaches in December, according to a source close to the syndicate. 

Somerfield:
trade interest

The group has mandated US bank Citi to explore strategic options, the source said. The main interest for the group so far had been expressed by trade buyers, which have been reinvigorated since the credit markets closed and put the brakes on a racing buyout market.

UK supermarkets Asda, WM Morrison, J Sainsbury and Tesco are all thought to be considering bids. Other interested buyers may include UK retailers Marks & Spencer and Waitrose, according to media reports.  

The Apax consortium acquired the company in November 2005 for £1.8 billion. It subsequently reportedly shelved a £1 billion refinancing in August after the problems in the credit markets rendered rapid recapitalisations a bull market phenomenon.

In the fourth quarter of 2007 leveraged buyout volume accounted for 86 percent of financial sponsor loans as opposed to 47 percent in the fourth quarter of 2006, when recapitalisations were far more common, according to data provider Dealogic.