Retail and consumer sector mergers and acquisitions comment – May 2008

Date

This month we saw transactions involving struggling retailers, particularly in the value segment, being bought out of administration as the credit crunch keeps a tight hold on the sector.

We saw private investor and former CEO of MK One, Elaine McPherson acquire Ethel Austin and parts of Au Naturale in a reported move to build a “value supergroup”. With the former MK One management team back on board, the team aims to bring the Group back to the forefront of the value market as it did with MK One in the 1990’s and 2000’s when the Group was a £14.8m EBITDA business.

Deals completed in the UK

JJB Sports acquires Qube for £1. JJB Sports has acquired the fashion footwear chain Qube Footwear Limited from private equity house West Coast Capital for £1. The 22 store retailer will become part of JJB’s footwear business, which includes the recently acquired Original Shoe Company.

Hornby acquires die-cast model business Corgi Classics for £7.5m. Hornby Plc, the international models and collectibles group, has acquired the die-cast model business Corgi Classics. Hornby has agreed to buy the brand, tooling, and intellectual property rights from NASDAQ quoted Corgi International Limited, for cash consideration of £7.5m. Hornby will focus on managing the brand for growth and plans to strengthen the product range and improve the marketing and distribution support.

Internacionale sells to unidentified buyer. Ossian Retail, the UK clothing group, has reportedly sold its Internacionale fashion brand to an unidentified buyer.

Brownhills sees MBO. Brownhills, the UK-based motor homes company, has been acquired by its management in a £46m deal.

The Works bought out of administration for £25m. The Works, the UK-based chain of bookstores, has reportedly been bought out of administration by Endless, the private equity group, and HSBC Bank.

Ethel Austin sells to Elaine McPherson. Elaine McPherson has bought Ethel Austin, a UK clothing group in administration, for an undisclosed sum.

Elaine McPherson acquires 46 Au Naturale stores. Elaine McPherson has bought 46 Au Naturale stores for an undisclosed sum.

IDP (Holdings) Ltd acquires Banner Ltd. IDP (Holdings) Ltd has acquired Banner Ltd from Cosalt plc for £4.5m.

Vision Express (UK) Ltd has acquired GC Bateman Ltd. Vision Express (UK) Ltd has acquired GC Bateman Ltd, a Surrey-based operator of 70 Bateman’s Optician stores, from its family shareholders. The financial details of the transaction were not disclosed. Vision Express chief executive Mr Bryan Magrath commented “This is a major step in the growth of Vision Express. It not only shows our strength and position within the market, but also demonstrates our intent to invest in brands with the same vision and values in order to grow our business.”

MK One sold to Hilco UK for undisclosed sum. Baugur, the Icelandic private equity group, has sold its fashion retail chain MK One to UK-based retail specialist Hilco UK for an undisclosed sum.

Ideal Bathrooms Ltd has acquired In-Line Sales and Distribution Ltd. Ideal Bathrooms Ltd has acquired Motherwell-based bathroom products distributor In-Line Sales and Distribution Ltd. The consideration was not disclosed.

Deals completed in other countries

Activa Capital acquires 37.4% stake in Sport 2000 for undisclosed amount. Activa Capital has acquired a 37.4% stakes in Sport 2000, the French sports equipment retailing chain. It has been reported that the transaction would help with the development of the group in France, with the aim to generate revenue of €1.2bn by 2012.

Sally Beauty Holdings acquires Pro-Duo. Sally Beauty Holdings has acquired Pro-Duo, a 40-store beauty supply chain located in Belgium, France and Spain for £15.2m. The acquisition was seen as a critical step in the Group’s international expansion plan within the European Union and is an important phase of Sally Beauty Supply’s international growth initiative.

Klopman sold to MW Corp. BS Private Equity, an Italian private equity house, together with IPEF III and MPS Ventures SGR SpA has sold its controlling stake in Klopman. Klopman, a European manufacturer of textiles for the work-wear, protective-wear and apparel industries, was sold to MW Unitexx S.A., a wholly owned subsidiary of MW Corp, and a sister company of S.Kumars Limited, an Indian company engaged in the textile business.

Tesco acquires 36 Homever stores in South Korea. Tesco has acquired 36 Homever stores in South Korea from the E-Land Group for a total consideration of £958m. Terry Leahy, Chief Executive of Tesco, commented: “This acquisition is an important strategic move, which will allow us to accelerate our growth in this key market and deliver a much stronger offer for customers. It also demonstrates our continued commitment to invest into South Korea.”

Nobia and DMG acquire 75% in Vesta Group from Thomas Winkler for an undisclosed price. Swedish company Nobia and Dutch company DMG have acquired a 75% stake in the German Vesta Group, a kitchen retail chain located in Germany. The seller is Thomas Winkler, the founder of Vesta.

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