Matalan sale talks collapse as investors baulk at £1.5bn price

Matalan founder Hargreaves had hoped the value group would fetch as much as £1.5bn but private equity groups Advent, TPG and Warburg Pincus baulked at the price.

Hargreaves’ reported asking price of 10 times earnings was regarded as particularly high, but the failure to do a deal may have valuation implications for retailers considering transactions, including New Look, Ocado, DFS and Supergroup, despite the successful £955m sale of Pets at Home to new private equity owners last month.

Shore Capital analyst Kate Calvert said: “It tells you that investors can afford to be choosy. You need a fundamentally different story to what the rest of the market is offering.”

Numis analyst Nick Coulter said valuations were “asset specific”.

He said: “I think Matalan are at the beginning of a journey to re-energise the offer. If they think they can deliver the potential why would they sell for a lower multiple [than they think it’s worth]?”

Retail Week originally reported in November last year that potential buyers of Matalan were unlikely to stump up as much cash as Hargreaves wanted.