BFG accepts reduced offer

Big Food Group has accepted a lower revised offer from Icelandic group Bauger.

The offer, of 95p a share, came about after a deal was thrashed out which could lead to the break-up of the company.

BFG, which counts Woodward Food Service, Iceland and Booker Cash and Carry in its portfolio, has been struggling to reduce costs and improve profitability for several years.

The food retailer has been in protracted talks with Bauger for several weeks as the latter used the leverage of its 22 per cent stake in the group to force through a lower offer than originally proposed by BFG. The tabled offer is estimated to be worth £326m.

BFG chief executive Bill Grimsey was guarded in his response to the deal, saying only: "Given the rapidly changing trading environment dominated as the supermarket giants continue to grow their dominance of the sector we believe that 95p represents a fair price value for the company today."

Mr Grimsey has had something of a rough ride at BFG. Shortly after he stepped into the chief executive's chair four years ago the company had to issue profits warnings. This followed the departure of both former chief executive Stuart Rose and finance director Malcolm Walker who left the company in a far shakier financial state than Mr Grimsey had been led to believe.

Rather than presiding over a robust, growing business, Mr Grimsey found himself fighting to return BFG to a sound financial footing. The Bauger deal could well be an ideal exit strategy for Mr Grimsey. "I still have a contract with the company, but the future has not been decided," he said.

The speculation is that Bauger will break up BFG, shearing off Booker and absorbing Iceland into its other food retailing operations, while focussing on the profitable Booker division.