Elliott in talks with Matalan over bid - report

By

Nigel TAYLOR

Published
Oct 12, 2022

Prominent global activist Elliott Advisors is in talks to back Matalan founder John Hargreaves in his bid to buy the heavily indebted fashion and lifestyle retailer, according to Sky News.

If the discussions result in a successful offer, it would add Matalan to a portfolio of British companies backed by Elliott. It has a wide portfolio of businesses, including commercial property giant Hammerson.

As it stands, Hargreaves who returned to the business this summer as executive chairman, is understood to be working with advisors at financier Lazard to find either a buyer for the entire business or an investor to provide fresh backing.

And the clock is ticking. Although Matalan had £121 million of cash at the end of May, it faces a January deadline to refinance its £350 million debt pile.

The links with Elliott are strong. Earlier this year Matalan took a £60 million loan from Bantry Bay -- in which Elliott owns a stake -- as it sought to strengthen its balance sheet ahead of a worsening retail landscape with inflation and the cost-of-living crisis likely to put intense pressure on many fashion businesses.

Matalan's performance is proving to be quite resilient. In a trading update to coincide with the arrival of its new interim CEO Nigel Oddy, who joined from New Look, it signalled record revenues for fiscal 2023’s first half and continued second-quarter sales growth both in-store and online.
 
Trading at Matalan has recovered since the height of the pandemic, with the company reporting 13-week Q2 sales of £286.4 million, up from £264.7 million last year. That’s getting close to the £292 million recorded in the 14-week pre-pandemic period in 2020. And the trading update also talked of “ongoing growth momentum”.
 
In July, Hargreaves said: “My belief in, passion for and commitment to our business are stronger than ever and I look forward to maximising our growth potential, along with the senior leadership team, delivering true omnichannel value for our customers.”

Matalan employs more than 11,000 people and trades from 230 UK stores and via its e-commerce platform. It also has more than 50 overseas franchise stores and claims to have 11 million customers worldwide.