Sports Direct has pulled out of the bidding for Patisserie Valerie, just two days after emerging as a surprise suitor for the stricken cake chain.
Mike Ashley’s sportswear group walked away from talks on Sunday, ending the prospect that Patisserie Valerie could join House of Fraser, Evans Cycles and Sofa.com in the Sports Direct stable.
Mike Ashley makes surprise bid for Patisserie Valerie
The approach, made last Friday, was an unexpected twist in the battle to rescue Patisserie Valerie, which fell into administration in January after a £40m black hole was uncovered in its finances.
It is understood that Ashley made a late bid reportedly worth more than £15m for Patisserie Valerie, but was told the offer was too low.
According to the Financial Times, Sports Direct was unhappy about being shut out of the bidding process, saying it “not been allowed access to a data room, any financial information or meetings with management” to allow it to improve its bid.
Sports Direct argued it was “at a serious disadvantage as a bidder” if it was left to rely on financial information in the public arena, which it claimed was “at best unreliable”.
It is understood Sports Direct was given access to the data room after tabling its first offer but the retailer nevertheless withdrew.
Sports Direct had bid for Patisserie Holdings – the parent company of Patisserie Valerie as well as the Druckers Vienna Patisserie, Philpotts, Baker & Spice and Flour Power City brands. The deadline for first-round bids was 1 February, a week before Ashley entered the fray.
‘Decline in quality’: auditors face scrutiny over string of scandals
Administrators at KPMG, which is running the company, has closed 71 of Patisserie Valerie’s nearly 200 stores and concessions, as it seeks a buyer for the company. Dozens of bids were received, either for the whole company or some of its stores. Around 900 jobs have been lost, with another 2,800 at risk if a buyer can’t be found.
Several parties are understood to be carrying out due diligence before submitting final-round bids to KPMG, but it is not clear when the bidding process will be concluded.
Coffee chain Costa, which is now owned by Coca-Cola, and a number of other parties are thought to have tabled offers for a parcel of stores but it is not clear if any parties want Patisserie Valerie as a going concern.
Patisserie Valerie blamed its financial plight on “very significant manipulation” of its balance sheet and “extensive” misstatement of its accounts. It suspended finance chief Chris Marsh, who subsequently resigned after being arrested and bailed by police.
The company was valued at £450m before the black hole was discovered. Its collapse into administration has wiped out shareholders, including chairman Luke Johnson.
Source: Read Full Article