Middle East investors in talks to buy majority stake in Iceland Foods retail chain

Investors from the Middle East are in talks to acquire a majority stake in UK's frozen food retailer Iceland Foods Ltd for up to £1.5 billion, according to a weekend report from The Daily Mail.

Wales-based Iceland Foods is 76 per cent held by the two collapsed Icelandic banks, Landsbanki and Glitnir, while the remaining 24 per cent is held by its founder and chief executive Malcolm Walker.

Representatives of Landsbanki and Glitnir, both banks now owned by the Icelandic government, started talks to acquire Iceland Foods with a consortium of Middle East investors headed by the Global Banking Corporation of Bahrain.

But the move could also trigger a bid from Walker, whose £1 billion offer for the retail chain was rejected earlier this year. Walker has the right to match a competing bid or force the potential suitors to buy his stake as well.

A consortium led by Icelandic investment group Baugur had acquired Iceland's then parent company The Big Food Group for £326 million in 2005, only to itself collapse in February 2009 during the global financial crisis. Its stake was passed on to Landsbanki and Glitnir, which also went bust in October 2009.

Their stakes are now held by the Icelandic government, which bailed out both the banks.