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Home Retail on Vultures Radar

Private equity vultures are hovering above Home Retail. The struggling Argos-to-Homebase retailer is forever being mentioned as a possible takeover target for Wal-Mart Asda and it certainly left itself even more vulnerable to a bid when it recently wheeled out a profits warning.

Down more than 30pc over the past year, the shares rallied 9.2p to 204.55p on news that Chicago-based private equity firm Madison Dearborn Partners (MDP) has bought a 4pc stake, or 34.6m shares.

MDP specialises in leveraged buy-outs of privately held or publicly traded companies. Its sudden appearance on Home Retail's share register raises hopes that it could be building a strategic stake or even warehousing the stock for a client, prior to an eventual offer being launched for the UK retailer, now valued at around £1.6bn.

Home Retail last month warned that tough trading conditions could shrink profits for the full year by £13m to £250m. Competition remains fierce while the weakness of sterling has raised costs, since many of the group's products are imported.

Source : Geoff Foster - Mail online

05 April 2011
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