British retail group Budgens, in which Musgrave bought a 28 per cent stake last year for £115 million (€146 million), has reported a 10 per cent increase in adjusted half-year pre-tax profits to £8.6 million sterling (€13.6 million) in the half-year to mid-November.
Turnover for the six months rose by 4.2 per cent to £255.3 million sterling, while operating profits rose to £9.8 million sterling from £9.3 million sterling. Operating margins were unchanged at 4.1 per cent.
Budgens is smaller than Musgrave in terms of sales, but similar in terms of store size, which is similar to Musgrave's SuperValu and Centra franchised outlets. Budgens is experimenting with franchised stores and if it succeeds, up to 50 franchised stores may be created over the next two years.
Musgrave has the option to increase its stake in Budgens to 43.5 per cent next September by converting loan stock it acquired with the equity it purchased from German group REWE.
Musgrave, which has two directors on the Budgens board, has given the British group an undertaking that it will not bid for Budgens without the support of the Budgens board, unless a bid is made by a third party.
