By PAUL PANCKHURST and IRENE CHAPPLE
Speculation is growing that Eric Watson's Pacific Retail Group is out of the race to buy the Farmers retail chain.
The likely buyer is now tipped to be a joint venture, possibly between Farmers management and a venture capitalist.
Market sources believe PRG cannot organise finance
in time for the Monday deadline for final bids for the 64-store chain owned by Australia's Foodland Associated.
The largely Eric Watson-owned PRG had been widely seen as a possible buyer, but the company's market capitalisation - $130 million - meant Farmers was always going to be a big stretch.
PRG's operations include retailers Bond & Bond, Noel Leeming and Bendon, and the consumer finance business Pacific Retail Finance.
Sources say indicative bids for Farmers were above $300 million.
One source said bids topped $350 million, but added that parties could name high figures to stay in the race and then scale back final bids.
In a report last week, Sarndra Urlich, an analyst at sharebroking firm First NZ Capital, said the most likely buyers were believed to be PRG or a private equity consortium.
Industry sources say the second option is the most likely.
If the purchase was a joint venture with Farmers management, some believe chief executive Nick Lowe would head the management buyout.
Another source said he would need the financial support of others in the management strata.
Lowe will not comment, but such an arrangement would suit Fisher & Paykel Appliances, which has had a long-term exclusive dealer's arrangement with Farmers.
If PRG become Farmer's new owner, F&P would have to distribute elsewhere due to the mechanics of the arrangement. That interest has seen F&P tipped as the wild card that could partner up with another potential buyer to grab Farmers.
F&P does not want to be a retailer, but has a consumer finance business and could grab Farmers' finance book, which Foodland describes as "the largest non-bank consumer finance business in New Zealand".
Opinions vary on how easily Farmers' retail and consumer finance arms can be split.
