Sketchley silent on retail sale rumours

27 February 1998

NatWest Equity Partners’ Birmingham office is said to be one possible bidder. Venture capitalist group Cinven, another rumoured buyer, has had to drop out of the running.

According to one industry source, two logical buyers would be supermarket giants Tesco or Sainsbury.

Tesco has long been rumoured to be seeking to enter into a deal that would provide it with a drycleaning operation and Sketchley already has drycleaning units installed within Sainsbury stores.

If the ongoing rumour proves to be true and a sale is imminent, it will cause concern to smaller groups and independent cleaners. Several told Laundry and Cleaning News that if a deal goes through, they will need to plan serious strategies in order to meet the new challenges posed by such a sale.

It has also created worries for Sketchley's suppliers who may find that the terms of their existing contracts could change under a new owner.

Sketchley’s director of retail operations, Mr Mike Clark, denied that there said there was any truth in the rumours “although it is no secret that Sketchley would sell Sketchley Retail if it received a suitable bid. This news has been in the public domain for some time,” he said.

The retail division is expected to be worth less than £10m—under half its original price.

But a sale would remove a substantial liability of leases on Sketchley’s 450 shops.

1997 was not a good year for chief executive John Jackson.

He failed to sell the group's drycleaning and photo processing business and was heavily criticised by shareholders for buying ARM—a cable maintenance business.

He also had to admit to a breakdown within the group of accounting controls which concealed a £10m gap in the group's profits.

It is believed Sketchley wishes to concentrate on its cable-laying business and its textile services division. Market analysts speculate that the company could sell one of the two divisions to cut its debt.



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