Wilko’s Potential Rescue Deal: HMV Owner Doug Putman Nearing Agreement

credit: theguardian

London (Parliament Politic Magazine) – The owner of HMV, Doug Putman, is nearing a deal to acquire the struggling discount retailer Wilko, potentially safeguarding a substantial number of jobs and most of its store locations. If successful, Putman intends to maintain the operation of around 300 out of the current 400 Wilko stores.

This agreement, if finalized, could signal the rescue of many of the 12,500 jobs that were at risk due to Wilko’s financial difficulties. This development follows the failure of a purchase attempt by private equity firm M2 Capital.

PwC’s Update on Wilko’s Operations and Negotiations

Wilko, a long-standing presence on the High Street, entered administration in August, placing 400 stores and a significant number of jobs in jeopardy. While the rescue deal under consideration might not encompass Wilko’s distribution centers in Worksop and Newport, nor its headquarters, it presents a last-ditch effort to salvage the business. 

The success of this revised bid is uncertain, but sources familiar with the matter suggest that the offer is deemed credible enough for major creditors to be consulted. Administrators from PwC announced that, come Monday, September 4th, the support center in Worksop would see a reduction of 269 jobs, with an additional 14 positions eliminated from a Wilko subsidiary firm.

PwC has indicated that all of the chain’s stores are presently operational and continuing to operate, while ongoing negotiations persist with potential buyers interested in acquiring segments of the business.

Canadian Billionaire Doug Putman’s Track Record of Rescuing Brands

Canadian billionaire Doug Putman has a track record of reviving struggling brands. In 2019, his company, Sunrise Records, acquired HMV, rescuing approximately 1,500 jobs and around 100 stores. The businessman’s family also holds ownership of Toys R Us in Canada.

Mr. Putman was on the verge of finalizing a deal. The GMB union, representing approximately 4,000 Wilko employees, expressed optimism about the possibility of a viable buyer stepping in to preserve jobs across physical stores and online. However, they cautioned that there are no guarantees, and they are preparing for various outcomes.

The union noted that a significant number of personnel in Wilko’s commercial trading, IT, finance, legal, and Human Resources departments would face redundancy on Monday.

The union disclosed that they have initiated discussions about voluntary redundancies at distribution centers and are actively engaged with entities like Bassetlaw District Council and the Welsh Assembly to explore options for retaining the sites.

Family-Owned Legacy of Wilko and Its Affordable Product Range

The GMB statement emphasized that while prospects for success might be limited at this point, they are committed to keeping members’ information on hand, with the hope of promptly reemploying them if buyers or new tenants are found for the sites.

Shoppers in Birkenhead, Merseyside conveyed their sadness about the potential closure of their local Wilko store. They highlighted its convenience for obtaining a wide array of items, especially DIY supplies. The store was seen as a crucial part of the community, and its closure would be deeply felt.

Wilko initially filled the gap left by Woolworths’ collapse in 2008, but has grappled with challenges over the past decade, partly due to competition from Poundland and B&M.

Many of Wilko’s outlets are located on traditional High Streets, which became less advantageous as consumers shifted toward larger retail parks and out-of-town locations.

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Competition from Rival Retailers for Wilko’s Stores

Founded in Leicester in 1930, the family-run company endured until its recent downfall. It gained recognition for offering affordable everyday products. Plans for job cuts were put on hold as PwC evaluated M2 Capital’s bid for the entire business, submitted the previous week.

M2 Capital announced a £90 million bid for Wilko and asserted its intention to maintain all employees’ positions for two years. However, reports suggest that the private equity firm failed to furnish proof of funding to administrators before a specified deadline.

M2 Capital’s chairman, Robert Mantse, expressed frustration with the administrators, using strong language and accusing PwC of unfair treatment. He indicated that M2 Capital is contemplating legal action. When asked about future steps, Mantse made a light-hearted comment about having lunch with someone.

Wilko’s competitors, including B&M and Poundland, are also reportedly interested in acquiring portions of the stores. These retailers, along with Home Bargains, have posed substantial competition for Wilko amid a climate of increased living costs, pushing consumers to seek bargains.

Beth Malcolm

Beth Malcolm is Scottish based Journalist at Heriot-Watt University studying French and British Sign Language. She is originally from the north west of England but is living in Edinburgh to complete her studies.