Author: Murad Ahmed, Jonathan EleyPublished by
Sports Direct has pulled its offer to buy Patisserie Valerie after just two days, complaining of being shut out of the bidding process for the beleaguered café chain.
The decision comes after the retail group, owned by billionaire Mike Ashley, went public on Friday with an offer to acquire the café chain that crashed into administration last month after the discovery of a long-term accounting fraud.
Mr Ashley has a history of seeking to buy ailing high street retailers, including recent approaches for department store House of Fraser, cycle-shop company Evans Cycles and music chain HMV.
On Sunday Sports Direct wrote to the Patisserie Valerie administrators, KPMG, complaining of lacking the information required to continue bidding for the group and its subsidiaries which include the Baker & Spice and Philpotts restaurant brands.
Chris Wootton, deputy chief financial officer for Sports Direct, wrote to David Costley-Wood, the KPMG partner leading the administration process, to say it had made a “serious and substantial offer” in excess of £15m, only to be told that it would need to increase that offer by as much as £2m.
As a result Sports Direct withdrew its interest, arguing that it needed more detailed financial information about the Patisserie Valerie businesses than was being provided. Sports Direct also suggested that other parties must have made offers for the group beyond what it was willing to pay.
In the letter - which has been seen by the Financial Times - Mr Wootton said that “SD has not been allowed access to a data room, any financial information or meetings with management”.
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The financial information which was available in the public domain “is at best unreliable, putting SD at a serious disadvantage as a bidder”, he wrote.
“SD has reluctantly decided to withdraw its offer for the businesses, as it is not able to match an offer of £18+m without having access to any due diligence, financial information or management meetings,” the letter said.
KPMG declined to comment, but a person brief on the discussions said Sports Direct was given the opportunity to see detailed financial material on Patisserie Valerie.
Accounting irregularities resulted in the discovery of a £40m hole in the café company’s finances last October. Finance director Chris Marsh was suspended and later resigned, followed shortly afterwards by the chief executive Paul May.
According to a company stock exchange announcement on January 22, Patisserie Valerie’s failure - which came after long negotiations with its two main lenders, HSBC and Barclays - was the “direct result” of the fraud. Talks with the banks failed, leading the company to collapse.
This article was written by Murad Ahmed and Jonathan Eley from The Financial Times and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to email@example.com.
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