dunnhumby Price Down to a Mere Billion?

Tesco's price tag for analytics pioneer dunnhumby may be reduced from around £2bn to something like half that following the dissolution of the firm's JV with US supermarket chain Kroger a month ago, reports Sky News.

Potential bidders for the groundbreaking consumer data firm include WPP, Nielsen, Experian and VC firm TPG. Sky News said private equity groups began their meetings with Tesco last week and have discussed offers around the £1bn mark, following the announcement in late April that staff from Cincinatti-based dunnhumbyUSA were moving to a new agency, to be known as 84.51° and wholly owned by grocery giant The Kroger Co. The new firm of c.500 people will use dunnhumby's tools under licence, but analysts have suggested dunnhumby's pre-tax profits will fall as a result of the changes: some suggesting they will halve, to around £70m and others predicting a smaller drop.

Whilst in theory a valuation should take account of the potential rise in dunnhumby's future earnings now that US arrangements allow it to work with other clients there, haggling bankers are if it suits them notoriously blind to anything other than very straightforward multipliers of turnover and profit. Thus far, Tesco has declined to comment on the latest rumours on the grounds of commercial confidentiality.

dunnhumby has offices in 29 countries and a home page at www.dunnhumby.com .