LONDON (Bloomberg) - Woolworths Group plc., whose UK stores sell goods from appliances to candy, said it rejected a takeover offer from Iceland Foods Ltd. because the bid was too low and would have saddled Woolworths with pension liabilities.

The company also turned down the offer by Iceland Foods, owned by Baugur Group Hf of Iceland, because it involved "complex restructuring", the London-based company said in an e-mailed statement yesterday. Iceland Foods founder Malcolm Walker and Baugur made a formal offer for Woolworths' 815 stores, the Sunday Telegraph reported, citing unidentified people close to the plan.

The proposal "undervalued the assets of the company and potentially would have adversely impacted the group's existing funding arrangement", Woolworth said in a statement distributed by Tulchan Communications. "There is a considerable opportunity for the group to build a sustainable value retail proposition based primarily on its small to medium-sized stores."

Woolworths ousted CEO Trevor Bish-Jones in June after same-store sales dropped over four fiscal years as fewer shoppers visit British town-centre stores. The company appointed Steve Johnson as CEO on August 12, betting he can lead a turnaround similar to the recovery he oversaw as head of home-improvement retailer Focus DIY. Mr. Johnson takes over in September.

Woolworths has fallen 48 percent this year in London, and traded at 6.65 pence a share on August 15, giving it a market value of £97 million ($181 million).

Baugur was not immediately able to comment on the Woolworths statement, Ray Jones, a security officer at Baugur's UK headquarters, said yesterday by telephone. The company may make a statement today, Mr. Jones said.

Merrill Lynch & Co. cut its recommendation on the stock to "underperform" from "buy" last month, citing the company's debt. The retailer sold four London stores to John Lewis Partnership plc.'s Waitrose Ltd. for £25.5 million in June.

The retailer was founded in 1909 as part of its US parent's expansion and is not related to Sydney-based Woolworths Ltd. or Woolworths Holdings Ltd., located in Cape Town, South Africa.