Morrisons Close To Clinching Kiddicare Sale
The supermarket group Wm Morrison is closing in on the cut-price sale of a baby goods retailer it acquired three years ago after labelling the acquisition an expensive "mistake".
Sky News understands that advisers to Morrisons have narrowed the field of bidders for Kiddicare down to two parties: Better Capital, the firm headed by Jon Moulton, the City financier; and Endless, a specialist restructuring outfit.
Better Capital and Endless were due to table final offers for Kiddicare on Friday, according to sources close to the process, with an announcement about the winning bidder possible as soon as next week.
A sale would bring to an end an unhappy period of ownership for Kiddicare, which was put up for sale in March after Morrisons took a £163m impairment charge on the maternity wear specialist. Bankers at Rothschild are running the auction.
City sources say that Morrisons, which has been hit by weak trading in its core business, is likely to have to pay a substantial dowry to the successful bidder.
One insider said on Friday, however, that that was not yet a definitive position and that the structure of any eventual deal remained unclear.
The sale could include all 10 of the stores operating under the Kiddicare name, or could involve the closure of some of the sites prior to a deal being completed, insiders said.
Morrisons bought Kiddicare for £70m in 2011, arguing that the online business would aid its own transition to becoming a multi-channel retailer.
It then acquired 10 failed former Best Buy electrical goods stores set up as part of a joint venture with Carphone Warehouse.
The supermarket chain received a £40m payment from Carphone because of the stores' onerous rent obligations, but the shops have struggled, while Morrisons' subsequent technology agreement with Ocado has rendered the use of Kiddicare's systems redundant.
Dalton Philips, Morrisons chief executive, is well-regarded but came under pressure at the company's annual meeting this month when its former chairman, Sir Ken Morrison, questioned directors' competence.
Morrisons has also announced 2,600 job cuts in recent weeks as it tries to simplify store management, in contrast to plans by rivals such as Lidl, which is recruiting another 2500 staff to accelerate its expansion.
On Friday, Tesco, which has also been affected by declining sales, held its annual meeting in London, although none of its former executives turned up to criticise the current board.
Morrisons and Better Capital declined to comment, while Endless could not be reached.