Wilko job cuts to begin this week after £90m bid falls through
Job cuts at Wilko’s head office and warehouses are expected to begin this week after a surprise £90m bid for the discount retailer fell through.
It is understood that about a third of the 1,400 staff at the group’s headquarters and distribution centres are to be made redundant after talks with M2 Capital collapsed because a failure to provide proof of funding.
Talks on a rival bid from the HMV owner, Doug Putman, continue. It is understood that he does not want to hold on to Wilko’s back-office function, only the brand and its stores.
Almost 12,500 jobs are at risk after Wilko called in administrators this month as it ran short of cash.
M2 is a little-known Anglo-Canadian finance group that has set up funds to buy hotels and car parts makers but has yet to complete any deals. It is the only bidder that has pledged to take on Wilko’s support staff as well as its shops. However, it has not satisfied administrators that it has the necessary backing to do so.
The private equity firm has reportedly been in discussions about financing the deal with Michael Flacks, an entrepreneur who owns a diverse array of businesses including the US retailer Kelly-Moore Paints, the skin brushing brand Non Nonsense Beauty and the pump maker Aldrich. He once looked at buying the British brand Laura Ashley.
However, Flacks told the Sun he had only heard from M2 this week: “I replied saying I have no interest in Wilko and I don’t back anyone’s business,” he told the newspaper.
In a letter to the chair of M2, Robert Mantse, seen by the Guardian, representatives for Wilko’s administrators at PricewaterhouseCoopers asked for “clarification as to the status of your interest” including “proof and source of funds, which is satisfactory to us” by 5pm on Wednesday.
A source close to the process has questioned the credibility of the M2 bid, which was put forward very late on the final day for offers on Friday and included a 20% stake in the business for employees.
Mantse responded: “Money talks and bullshit walks.”
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M2 has said it has £150m lined up to support a buyout and turnaround at Wilko.
Putman’s offer does not include the retailer’s head office and warehouse, but would include more than 200 of its 400 shops, possibly protecting up to 10,000 jobs.
The Canadian tycoon’s family also owns Everest Toys, the largest toyand games distribution company in North America, and Toys R Us in Canada. He is expected to combine Wilko’s operations with HMV and his toy business if his bid is successful.