Private Equity Firms Trying to Woo Sir Keith Mills for Tesco Bid


January 27, 2015

Many private equity firms are said to be after the entrepreneur, sir Keith Mills, as firms are looking to bid for Tesco’s customer data unit, Dunnhumby. The firms believe the successful entrepreneur could help them win the fight against the US-based buyout firm, Clayton, Dubilier & Rice.


Successful Entrepreneur
Sir Keith Mills is a successful British entrepreneur, whose biggest achievements include the Nectar loyalty programme and being one of the leading figures in the London Olympics bid.The entrepreneur made tens of millions as he sold Loyalty Management Group, which operated the Nectar scheme, in 2007. The company was set up together with the private equity firm, Warburg Pincus. Sir Keith’s connections to private equity sector help to explain why the firms are after him.


Sky News, which broke the story on Monday, reported one private equity bidder stating Sir Keith is “the perfect candidate to lead a bid”.


Tough Times for Tesco
The UK supermarket chain has been going through a major transformation in the past months. Tesco owns the data operations business Dunnhumby, which it is now looking to sell. Tesco bought the company in 2004.


Dunnhumby was founded by Edwina Dunn and Clive Humby and the company is considered to be among the most successful British start-ups in the past 25 years. The company was key in designing the Tesco Clubcard scheme, which helped the company gain its leading market position. Dunnhumby has also served big brands such as Coca-Cola, Shell and Procter and Gamble.


But Tesco is shedding off some of its assets in a bid to restore its presence as a leading supermarket chain. Private equity firms and buyout companies across the UK and the US are set to be among the main bidders for the company.


Private Equity Interest
The specific private equity firms wooing Sir Keith Mills have not been named and Sir Keith himself has not spoken to media. It is expected that big firms such as KKR are among the firms interested in buying the company and in having Sir Keith as their bid leader. But private equity firms won’t be fighting with each other, as there are plenty of other companies looking to make a bid for the company. According to the Drum, advertising group WPP is prepared to bid £2 billion for Dunnhumpy.


The US-based buyout firm, Clayton, Dubilier & Rice, is also set to make a bid. According to Yahoo Finance, Sir Terry Leahy is helping the company in its bidding process. Furthermore, Advent International and General Atlantic Partners are reportedly interested. But the sale might not even take place, even if Sir Keith would work with a private equity firm, as Tesco’s chief executive, Dave Lewis, has yet to rule out a possible listing to the stock market as an exit alternative.


The bidders will also have to navigate the difficulty of Dunnhumpy’s client list, as the company currently deals with many US-based firms as well which could prove a regulatory issue. It remains to be seen which private equity company will openly put its name out for the bidding process first and whether Sir Keith is to help them.  

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