Private equity firm M2 Capital has made a last-minute £90m bid for Wilko, with a pledge to retain all employees’ jobs for two years, according to a report by The Guardian.
News of M2 Capital’s bid follows reports on Friday that HMV owner Doug Putman was planning to purchase parts of the financially stricken budget retailer.
Jonathan De Mello, founder and chief executive of JDM Retail, the retail and property strategic consultancy, said: “With reported last-minute bids from M2 Capital, and HMV’s Doug Putman, it seems there is appetite to invest in turning the ailing Wilko brand around.
”In either scenario, both acquiring businesses would seek to retain the bulk of the store portfolio – M2 say they will retain all 400 stores, while Putman has talked about retaining circa 350.”
According to De Mello, although this would be the best outcome for Wilko in terms of jobs saved, 350 stores is “too many to retain” as the retailer will have a significant tail of more than 100 low- or negative-contribution stores.
Wilko requires significant investment in product rationalisation and improvement and internal and external store configuration, a significant upgrade of its ecommerce platform and a total branding and marketing overhaul, he added.
“Given both offers will likely be relatively ‘low-ball’, I am sure both M2 Capital and Putman will have factored these points into their bids, but successfully achieving all of the above is no small undertaking,” De Mello said.
“The administrator will be under significant political pressure to accept one of these bids – but it is important that fair value is achieved for all stakeholders.
“In the event that neither bid is accepted, then most stores will likely close, with competitors picking up small parcels of stores instead – with Poundland [100 stores], B&M [40 stores] and Original Factory [10 stores] the principal bidders. In that scenario, unfortunately only 150 out of Wilko’s 400 stores will remain.”
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