The battle to gain control of fashion and lifestyle retailer Matalan is intensifying, as founder John Hargreaves fights to retain ownership of the business. Hargreaves has reportedly joined forces with private equity firm Elliott Advisors to make a 50-50 offer. However, he faces competition from other potential buyers, including senior Matalan lenders and private equity firms Alteri and OpCapita.

In September, the lenders, which include investment manager Invesco and UK hedge funds Tresidor Investment Management and Man GLG, initiated the sale process after Matalan racked up £500 million in debt due to the impact of the pandemic and inflationary pressures. As part of the sale, the lenders have offered to provide £200 million of secured financing to bidders, who would then have to secure £150 million of fresh equity themselves.

Although the lenders are considered to hold a strong position in the sale, Hargreaves is hoping that his deep understanding of the business, as well as his family’s ownership of the company responsible for Matalan’s IT platform, will give him an advantage. Matalan has informed potential buyers that it expects to generate underlying earnings of £30 million this year, with projections to reach £114 million by 2026.

The selection of the successful bidder is anticipated to take place in the following weeks. Matalan has chosen not to provide any comments on the ongoing sale process. As the future of Matalan hangs in the balance, all eyes are on the individual or organization that will emerge as the new owner of this financially burdened retailer.

Useful Links:
Debt-hit clothing retailer Matalan put up for auction
Official Matalan website