Waitrose is in talks to acquire Eat, the sandwich and coffee chain frequented by City workers, as part of its ambitious expansion plans aimed at doubling sales to £10bn ($15bn) by 2020.
The upmarket supermarket – part of the John Lewis Partnership – is in early stage discussions to buy the 100-store chain, which was set up by Niall and Faith MacArthur in 1996 but now co-owned by Penta Capital, in a deal that could be worth about £100m.
For Waitrose, which has said it wanted to increase its presence in the convenience store market and is expected to open its first mini convenience-sized shop in Cambridge this summer, the acquisition of Eat would give it an instant chain of cafes through which to sell food.
It has already struck deals with other retailers to grow the brand, agreeing to sell its food in 700 Boots outlets and is testing a partnership with Shell petrol stations.
Famed for its emphasis on quality, Waitrose has defied predictions it would be battered by the recession to emerge as the sector’s fastest-growing big grocer.
Under the tie-up with Boots, sections of Britain’s best-known pharmacy chain will be transformed into mini-Waitroses, with the grocer’s own fixtures, fittings and signage. In return, Waitrose will sell a range of Boots health and beauty goods in its stores.
For Eat, which has been hurt by the reduction in consumer spending over the past 18 months, any deal is likely to net its owners a multi-million payout. The MacArthurs still own a 45 per cent stake in the business, while Penta holds a similarly sized minority stake.
This is not the first time that Eat has tried to sell itself. After rival Pret a Manger was sold to Bridgepoint for £350m two years ago, the company hired PwC to explore a sale for a reported £120m-£150m.
The plan had to be shelved following the collapse of the credit market in the summer of 2008.
For the year to June 27 2009, the group reported an 11 per cent increase in turnover to £75.5m, thanks to store openings. However, pre-tax profits fell nearly a third to £2.7m as a result of weaker margins and “significant one-off costs related to the streamlining of the business”.
Like-for-like sales fell 3 per cent – the group’s first decline since it was founded in 1996. Net debt stood at £7.7m.
source: ft.com
