DISCOUNT clothing retailer Matalan has drawn interest from at least five major buy-out firms in the opening stages of a £1.5 billion auction, it was reported today.
Private equity buyers TPG, Blackstone, Warburg Pincus, BC Partners and Advent International have all submitted initial bids for the company, the Financial Times said.
A sale would net hundreds of millions of pounds in profits for founder John Hargreaves, who took Matalan private in an £827 million deal backed by £410 million of debt three years ago.
Matalan, which was unavailable for comment, has shown resilience in the recession as its cut-price clothes and homewares attract cost-conscious customers.
The group’s operating profits reached £102 million in the year to February 28 - up from £89.4 million a year earlier - while like-for-like sales rose by 8.2% in the first 14 weeks of the new financial year.
Former Boots boss Richard Baker is said to be leading Advent’s bid in his new role as an operating partner with the buy-out firm, and could be a candidate for the chief executive role if successful.
The deadline for first round bids was Tuesday and the board met to consider the offers yesterday. A deal is likely to be completed in the new year when would-be buyers have had the chance to examine Christmas trading figures, the FT said.
Mr Hargreaves opened the first Matalan store in Preston in 1985 - taking inspiration from low-price, out of town retailers in the US - and grew the chain to 50 outlets within ten years.
The company currently has more than 200 stores but recently announced plans for a major expansion programme which could see as many as 100 new stores opened in the years ahead.