Elliott holds talks with Hargreaves over backing Matalan bid
John Hargreaves’ bid to wrest back control of Matalan could be given a valuable boost from the owner of Westminster.
Elliott Advisors has entered talks with Matalan’s founder about helping to fund an offer to buy the business, according to Sky News.
The discount clothes retailer is weighed down by hundreds of millions of pounds of debt following the volatile trading conditions of the pandemic.
This has been exacerbated by global inflationary pressures have impaired margins, while supply chain challenges have hampered stock availability.
It now faces a deadline in January to refinance £350m in debt, with Hargreaves previously eyeing a sale of the company.
If Hargreaves’ discussions with Elliott conclude with a successful offer, the investment group would add the discount clothes retailer to a portfolio of British companies in its roster.
Elliott is known as one of the world’s most prominent activist investors, owning stakes in businesses including Avant Homes, Travelport and Foyles.
It has also held stakes in public companies including pharmaceuticals giant GSK and Hammerson, the shopping centre owner, where it has agitated for management and strategic changes.
Matalan also took a £60m loan from Bantry Bay – in which Elliott owns a stake – as it sought to strengthen its balance sheet ahead of what threatens to be a prolonged slump in consumer sentiment.
It remains unclear what valuation any sale process would generate in the current challenging economic conditions.
However, Hargreaves could face competition from Mike Ashley, the Frasers Group tycoon, who is rumoured to be preparing his own offer for Matalan.
Based in Liverpool, Matalan employs more than 11,000 people and trades from 230 UK stores.
It also operates an e-commerce platform and has more than 50 overseas franchise stores. The company claims to have 11 million customers.