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March 28, 2004
Tempers rise as Interflora plots sell-out
William Lewis and Matthew Goodman
THE board of Interflora, the florist network, is preparing to sell out to a
private-equity firm, ending 81 years of independence.
The proposed deal would in effect result in a demutualisation and trigger
windfall cash and equity payments to Interflora's 1,850 members. But the
plan could be derailed by angry florists worried that the management team
are seeking to enrich themselves at their expense.
Steve Richards, the chief executive brought in last September, is embarking
on a nationwide tour to persuade the small businesses that make up the
Interflora chain to incorporate the group and sell a majority stake to a
private- equity firm. A flotation would then follow.
Price Waterhouse Coopers, the professional-services firm, has been appointed
to advise the board. Florists are being urged to appoint their own financial
advisers to protect their interests.
The plan to pursue incorporation will bring back memories of 1997, when
rebel Interflora members ousted the board who tried to shake up the group.
It has been compared with the situation at Londis, the convenience store
group, whose management tried to sell it to Irish food distributor Musgrave.
Londis is also owned by its member shopkeepers, who were furious when they
learnt of the multi-million-pound fortunes Londis directors were going to
earn from the deal. Details of the benefits Richards and his team stand to
make at Interflora are unknown.
Interflora's members employ 10,000 staff to help deliver flowers up and down
Britain at three hours' notice. But the network has been hit hard by
competition from big supermarkets, particularly Tesco, which has undercut it
on price.
Last night, Richards confirmed that he and his fellow board members wanted
to turn Interflora into a private company and bring in new investors to
raise money for marketing, people and IT systems.
He acknowledged it would meet resistance and said some members were "feeling
numb, some were in denial and some were just plain angry. Others had got
through that and come out the other side."
Under the proposals, members would receive windfall payments, likely to be a
few thousand pounds, as well as shares in the new entity.
It is not yet clear what sort of value would be placed on Interflora, which
makes a profit of about £2m on sales of about £20m. Profitability has been
flat for the past seven years.
Richards underlined the need for Interflora to modernise in the wake of the
threat from rivals. "The stakes are very high. It's an increasingly
competitive environment."
As well as changing the corporate structure of Interflora, Richards wants to
take the business into new areas, with members arranging same-day deliveries
of other gift products, such as champagne, chocolates and teddy bears.
He also said there was an opportunity to develop as a database marketing
business, as it has records of customers who buy flowers with their credit
cards
Via Peter
Tempers rise as Interflora plots sell-out
William Lewis and Matthew Goodman
THE board of Interflora, the florist network, is preparing to sell out to a
private-equity firm, ending 81 years of independence.
The proposed deal would in effect result in a demutualisation and trigger
windfall cash and equity payments to Interflora's 1,850 members. But the
plan could be derailed by angry florists worried that the management team
are seeking to enrich themselves at their expense.
Steve Richards, the chief executive brought in last September, is embarking
on a nationwide tour to persuade the small businesses that make up the
Interflora chain to incorporate the group and sell a majority stake to a
private- equity firm. A flotation would then follow.
Price Waterhouse Coopers, the professional-services firm, has been appointed
to advise the board. Florists are being urged to appoint their own financial
advisers to protect their interests.
The plan to pursue incorporation will bring back memories of 1997, when
rebel Interflora members ousted the board who tried to shake up the group.
It has been compared with the situation at Londis, the convenience store
group, whose management tried to sell it to Irish food distributor Musgrave.
Londis is also owned by its member shopkeepers, who were furious when they
learnt of the multi-million-pound fortunes Londis directors were going to
earn from the deal. Details of the benefits Richards and his team stand to
make at Interflora are unknown.
Interflora's members employ 10,000 staff to help deliver flowers up and down
Britain at three hours' notice. But the network has been hit hard by
competition from big supermarkets, particularly Tesco, which has undercut it
on price.
Last night, Richards confirmed that he and his fellow board members wanted
to turn Interflora into a private company and bring in new investors to
raise money for marketing, people and IT systems.
He acknowledged it would meet resistance and said some members were "feeling
numb, some were in denial and some were just plain angry. Others had got
through that and come out the other side."
Under the proposals, members would receive windfall payments, likely to be a
few thousand pounds, as well as shares in the new entity.
It is not yet clear what sort of value would be placed on Interflora, which
makes a profit of about £2m on sales of about £20m. Profitability has been
flat for the past seven years.
Richards underlined the need for Interflora to modernise in the wake of the
threat from rivals. "The stakes are very high. It's an increasingly
competitive environment."
As well as changing the corporate structure of Interflora, Richards wants to
take the business into new areas, with members arranging same-day deliveries
of other gift products, such as champagne, chocolates and teddy bears.
He also said there was an opportunity to develop as a database marketing
business, as it has records of customers who buy flowers with their credit
cards
Via Peter