An attempted sale of British online retailer Very Group is nearing collapse after prospective buyers, including China’s JD.com, declined to match the company’s £2bn price tag, Sky News reported, citing sources.
The report said a disposal process, tentatively initiated earlier this year, is now unlikely to move forward.
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If the auction is withdrawn, US private equity group Carlyle is expected to remain in control of Very Group for the time being.
People familiar with the matter told Sky News that the launch of a sale process had been tied to the transfer of control that placed the online retailer under Carlyle’s ownership following a financial restructuring.
Those sources said the requirement was to begin an auction, but not to complete a deal at any valuation. Carlyle is understood to have set £2bn ($2.7bn) as the minimum level at which it would be prepared to sell.
JD.com had reportedly shown interest in acquiring Very Group, which sells products across categories including fashion, toys and electricals and serves roughly 4.4 million customers.
However, the Chinese company is also facing a regulatory review in Europe linked to its bid for Ceconomy, the German electronics retailer.
A person close to the situation told Sky News that JD.com had become “reluctant” to pursue another acquisition before the Ceconomy deal is completed.
The same person said increasing political attention on JD.com’s expansion in the UK, including the introduction of its Joybuy platform, had added further complexity.
Very Group also attracted early-stage interest from several private equity houses and other financial backers, among them Elliott Advisors.
Chaired by Nadhim Zahawi, the business competes with retailers such as Argos, which Sainsbury’s is currently seeking to sell to a consortium of retail executives.
Plans for an “immediate” sale process were outlined earlier this year in a Companies House filing by administrators of VGL Holdco, a corporate entity no longer linked to Very’s day-to-day operations.
PricewaterhouseCoopers was appointed last November to manage the insolvency of VGL Holdco, a move that enabled Carlyle, already a longstanding creditor, to assume control for a nominal £1.
The company recently reported a record third-quarter margin while full-year pre-exceptional earnings before interest, tax, depreciation and amortisation (EBITDA) are forecast at between £310m and £320m.
Very generates annual revenue of more than £2bn.
The business had been owned by the Barclay family for over two decades and was still known as Littlewoods when it was sold in a £750m transaction in 2002.
Formerly trading as Shop Direct, Very Group employs thousands of people and operates the Very and Littlewoods general merchandise brands.
