P157 - Livingston brothers hire UBS in £1bn bid for Somerfield
Sunday Times, 27 March 2005 by John Warples and Richard Fletcher

THE secretive Livingstone brothers have hired UBS, the investment bank, to advise on their proposed £1 billion-plus bid for Somerfield, the food retailer.

The move comes as hedge funds, which now control a 20% stake in Somerfield, call on the board to initiate a formal auction of the group.

The brothers, Ian, 42, and Richard, 40, have already teamed up with Nomura, which will provide debt finance. The Japanese bank may also take an equity stake.

The Livingstone-led consortium has identified a top retail executive to run the operation. It is thought the brothers, who also own the David Clulow optician chain, looked at buying Somerfield last year, but their initial approach was rebuffed. Through their holding company London & Regional, the Livingstones control a property empire that is far bigger than has so far been acknowledged. On the Continent they control a £1.2 billion commercial property and hotel portfolio.

In Britain, the brothers have interests in property worth up to £2 billion, which includes part-ownership of the Woolworths stores, Shell petrol stations and the Hilton in London's Park Lane.

The company employs around 80 people in Europe and has offices in Stockholm, London and Helsinki. It is a company that has been built up over two decades. The brothers belong to a new generation of property players who like to operate out of the public eye as private companies. But their ability to tap bank finance means they can take on big-ticket deals.

The board of Somerfield will come under pressure this week to open its books and allow interested parties to conduct due diligence on their business and freehold estate. It is also being stalked by Robert Tchenguiz, the property dea1er, and Baugur, the Icelandic group.

With such a large number of shares now in the hands of short-term investors few observers believe Somerfield has an independent future. ''The key now is an orderly auction," said one.

Tchenguiz is believed to have tabled a 250-a-share offer. It is unclear whether Baugur - which tabled a 190p-a-share offer last month - has the backing to compete. All the bidders are considering selling the convenience stores to reduce debt if their bids succeed.

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20/5/05 Last Updated 20/5/05