A potential deal to save the majority of Wilko’s stores is understood to have run into problems with suppliers. The news came as it was announced that B&M had reached an agreement with administrators to buy up to 51 of the failed stores.
Doug Putman, who engineered a turnaround of HMV, has been negotiating to save as many as 300 of Wilko’s 400 stores. However, a report by The Guardian said the deal has been put at risk as some key suppliers want outstanding debts repaid upfront to guarantee continuing to provide products to the chain.
Talks over the weekend are also said to have raised concerns that some suppliers, who cancelled shipments to Wilko’s stores as the chain went into administration last month, would not be able to ship more products for another six weeks.
Reports noted that the issues with large suppliers and financing concerns had slowed the negotiations with administrator PwC, but sources suggested that a slimmed-down deal could still be struck this week.
After staff layoffs in Wilko’s offices and warehouses began yesterday, it was revealed today that rival budget retailer B&M was buying up to 51 of the stores for a maximum consideration of £13m. It has not yet been confirmed which of Wilko’s stores will be rescued through the transaction.
In an update to investors, B&M said: “The consideration is fully funded from existing cash reserves, and the acquisition is not expected to be conditional on any regulatory clearances”.
The shops will be rebranded under B&M’s name, with an update on the timing of the new openings set to be provided alongside its half-year results on 9 November.
Other rival retailers such as Poundland, The Range, Home Bargains and TOFS are also believed to have expressed an interest in buying out parts of Wilko’s business.
Whilst all the Wilko stores remain open, selling off existing stock, industry sources have said that PwC is on the brink of announcing the first closures in the coming days.
NAM Implications:
- ‘Some key suppliers want outstanding debts repaid upfront…’ Imagine!!
- Now the breakup has started, anticipate similar slices going to Wilko’s rivals.
