Cork-based wholesale and retail grocery group Musgrave has moved closer to completing the takeover of British supermarket group Budgens.Musgrave has offered £175 million sterling (€270.5 million) for the 55 per cent share of the listed British company it does not already own.

The independent directors of Budgens have unanimously recommended that its shareholders accept the offer, which market analysts have indicated is a fair price for the company.

Musgrave has also received indications that the institutions, which own 25 per cent of Budgens, will also accept its offer.

Details of the deal are being circulated to Budgens's 16,000 shareholders and they have 21 days to accept it. Given the indications of acceptances it has already received, the takeover is likely to be successful.

The price offered represents a premium of 28.2 per cent on the average price of Budgens shares in the six months before Musgrave's approach was announced.

Musgrave, which is 75 per cent owned by the extended Musgrave family, will remain a privately owned company.

If the offer is accepted, Budgens will be de-listed from the London market and will be subsumed into the private group. Musgrave chairman Mr Hugh MacKeown is also a substantial shareholder.

The takeover bid will be financed by a consortium of banks including Barclays, AIB, Bank of Ireland, IIB and Ulster Bank.

The Musgrave group operates more than 170 SuperValu stores and about 300 Centra convenience stores in the Republic and another 77 of these stores in Northern Ireland.

Most of the stores are franchised. It also operates Musgrave Cash & Carry wholesale division and owns the Spanish retail chain Dialsur.

Budgens has 210 owned and franchised stores in the midlands and south of England, employing 6,000 staff. Commenting on the offer yesterday, Mr MacKeown said the takeover was part of its long-term strategy to expand its presence in Britain.

"Budgens has continued to perform well since our initial investment in August 2000. The Musgrave and Budgens management teams have collaborated on a number of successful initiatives that have had mutual benefits".

Musgrave has stressed a commitment to further growth and development of Budgens and believes this can be best achieved by retaining the supermarket unit as an autonomous operating division within the Irish-owned group.

Details of the offer came as Musgrave announced a 37 per cent increase in pre-tax profits to €47.1 million in the 12 months to the end of December 2001.

During the year, turnover rose by 12.8 per cent to €2.27 billion, compared with €2.01 billion in 2000. At the end of last year, it had total net debt of €195 million.

Managing director Mr Seamus Scally said the results were achieved on the back of strong growth across the group.

Stores are owned by managers who franchise the business from Musgrave. Many of the SuperValu and Centra stores have been extended and refurbished.

Sales in the Republic grew by 13.5 per cent last year and accounted for 79 per cent of the group's total turnover. SuperValu and Centra are estimated to have 22.5 per cent of the Irish retail grocery market.

The supermarkets in the North also put in a strong performance, with sales up 12.7 per cent.

Mr Scally said Budgens had performed in line with its expectations.

Its results for the 28 weeks to November 11th, 2001, showed a 13.3 per cent increase in profits to £9.8 million.