Tesco Is A Better Target For Private Equity Firms

Financial advisory firm Bernstein suggested in The Grocer that Tesco was the “most attractive” of the UK food retailers for private equity investors. “The turnaround is complete, the business is simplified, diversified and dominant, and the next five years are set to be a story of consistent, strong execution and returning to shareholders.”

Tesco’s market cap is nearly £20bn, with an enterprise value of £32bn when debt is added, making for the biggest potential acquisition in the UK.

NamNews Implications:

• From a NAMs-eye-view, the possibility of a company being in play means a distraction for management.
• (The price paid in a takeover determines the degree of Sale & Leaseback and pressure on financial performance)
• A private equity buyer means a five-year exit strategy via re-flotation, even more emphasis on financial performance.
• Therein the opportunity for suppliers:
• Propose initiatives that demonstrate a direct impact on Tesco’s bottom line…
• …and will look good to bidders.

#TescoBid #MultsConsolidation