Checkout at 40: Musgrave Acquisition Challenges The Major Multiples (July 1995)
This year, Checkout commemorates its 40th anniversary under its current ownership, and with this in mind, every week, Retail Intelligence is going to ‘reel in the years’ and publish a story from our extensive archives. This article from July 1995 examines what Musgrave's purchase of L&N will mean for the grocery landscape.
It’s been a long, busy month for Musgrave Ltd. At the end of June the company announced it had joined the UK buying group NISA Today’s, and in early July published its company accounts, showing operating profits of up 36% for their Irish operations.
But the bombshell announcement for the trade was the purchase by Musgrave of the L&N chain, one of the best-kept secrets of recent times.
Michael Walsh, company secretary and finance director (pictured) told Checkout that Musgrave had originally examined the L&N operation nine months ago, and after three months of internal planning had approached Robert Andrews of L&N with their proposition. “An implicit part of the negotiations from then on was that only a few individuals in both organisations would know about our plans, and we wrote to our retailers only a day before the public announcement of the sale, which had been delayed while we waited for government approval.”
The purchase of L&N means that Musgrave, which owns the franchise to 143 independently owned SuperValu supermarkets and 233 Centra foodmarkets, a chain of eight cash and carrys, and a 90% share in the Spanish group, Dialsur, now holds nearly 20% o the Irish grocery trade, and is the biggest player after Quinnsworth and Dunnes Stores.
A figure of £20 million has been rumoured for the sale, and with L&N turnover during 1994 being £95 million, and after tax profits £2 million, this figure appears correct. Musgrave says that the deal has been funded by its own resources and bank borrowings.
The 18 stores in the L&N chain, located in Munster and Leinster, will operate under the SuperValu name, bringing total market share for independent retailers to about 48%. Musgrave has assured staff at L&N that no job losses are envisaged.
However, there may be difficulties with the deal in towns where both L&N and SuperValu have outlets. Retailers in the areas affected were remaining tight-lipped about how the problem will be resolved. In Drogheda, for example, the present SuperValu will have to compete under the same name with a 25,000 sq ft L&N. Musgrave maintains there will be no major problem. “We’ve dealt with this type of problem before, it is a sensitive issue but we’re confident we can resolve it to the satisfaction of our retailers,” Michael Walsh told Checkout.
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