Tesco is among several parties considering an offer for Majestic Wine, which owner Fortress Investment Group put up for sale several weeks ago. The chain, bought for £95m in 2019, is expected to fetch hundreds of millions of pounds.
Majestic Wine is Britain's largest specialist wine retailer, with more than 200 stores across the UK and Jersey and a workforce of more than 1,000. It has been owned by Fortress Investment Group, the US private equity firm, since 2019.
Sky News reported on Saturday that Tesco is weighing a takeover bid for the business. The supermarket group is one of a number of bidders in an auction that Fortress launched several weeks ago. The identities of the other parties have not been disclosed.
The numbers
Fortress paid £95m for Majestic in 2019, when the chain's then listed parent sold it to concentrate on its online business, Naked Wines.
Analysts now put the likely price in the hundreds of millions of pounds. The exact valuation is unclear, and terms were not disclosed. A sale at that level would represent a multiple of Fortress's entry price after a seven-year hold.
Under Fortress, Majestic has opened more than 20 stores and expanded through acquisition. It bought the Vagabond Wines bar chain out of administration, and last year added Enotria, a supplier to the hospitality trade.
Why Tesco
Tesco, led by chief executive Ken Murphy, holds about 28% of the UK grocery market and is reported to be targeting a 30% share for the first time in more than a decade.
A deal would be its largest since the £3.7bn takeover of wholesaler Booker in 2018. One analyst suggested that an acquisition could be made through Booker, which would fit with Majestic's commercial arm and the Enotria business, both of which sell to restaurants, pubs and hotels.
Tesco shares closed down 1.2% at 469p on Friday, before the report was published.
What happens next
Tesco has not confirmed its interest and there is no certainty that it will make a formal offer. With several bidders involved, Fortress retains the option of selling to another trade buyer or to a financial sponsor.
Any Tesco bid could attract the attention of the Competition and Markets Authority, given the group's existing share of UK alcohol retail. Its Booker deal took more than a year to complete after a full competition review.
For Fortress, the process tests whether a specialist bricks-and-mortar retailer, rebuilt under private ownership, can command a strategic premium from the UK's largest grocer.
Original source: Sky News — https://news.sky.com/story/supermarket-giant-tesco-weighs-shock-takeover-bid-for-majestic-wine-13594582
