Consumer Sector Comment – September 2014

Date

E-commerce continues to drive high levels of deal activity across a wide range of consumer sub-sectors as technology facilitates changing customer behaviours and corporate acquirers seek opportunities to add relevant expertise.

Clearwater International’s Consumer Team completed another transaction this month, advising on the sale of Gavekortet.dk A/S, the leading Nordic gift card provider, to Nordisk Film A/S. Nordisk Film is part of Denmark’s largest media group, Egmont. In the UK, Egmont is well known as a publisher of childrens’ books including the current best-selling series of Minecraft books, based on the hugely popular computer game, as well as titles based on classic characters such as Thomas and Friends, Mr Men and Tintin. Nordisk Film, which made the acquisition, is the leading developer, producer and distributor of films in the Nordic region and the leading cinema operator in Denmark and Norway. Nordisk Film has established a growth unit, NF Direct, focusing primarily on investing in digital ventures within tickets, gifts and niche movie channels.

Established in 2003, Gavekortet.dk has since grown to become a leading B2C and B2B seller of gift cards and incentive gift solutions across the Nordic region – representing a large number of well-known retail and leisure brands. The majority of sales are made online, with operations in Denmark, Sweden, Norway, Finland and Poland. With this acquisition, NF Direct will have revenues above €40m and more than 100 employees with high anticipated future growth potential since the Nordic market for gift cards is expected to double over the next five years.

This month saw a number of other interesting transactions in the digital space across a range of consumer sectors, from art to take-away food:

  • Aurum Holdings, the luxury jewellery retailer which includes the Watches of Switzerland, Mappin & Webb and Goldsmiths fascias, announced an agreement to acquire 100% of the share capital of online watch retailer Watch Shop;
  • Zurich-based media company Tamedia acquired the majority stake in Trendsales, operator of the leading classifieds platform for vintage fashion in Denmark. In addition to vintage clothing, the site also has sections where online merchants offer goods at both regular and discount prices as well as a magazine section with lifestyle content and fashion-related blogs;
  • Delivery Hero, a Berlin-based online take-away marketplace, raised $350m to fund its global expansion and prepare for an IPO in less than 12 months. This came after take-away sites GrubHub and Just Eat raised more than $300m, valuing the companies at $3.1bn and $2.6bn respectively;
  • Art and design publisher Phaidon Press, owned by Apollo Asset Management founder Leon Black, acquired Artspace, an internet start-up which sells fine art by contemporary artists. The transaction is in line with the strategy of Phaidon Press to increase its online presence through adding an art marketplace and having more access to art collectors. It will also help Artspace to benefit from Phaidon’s global distribution presence and sales channels;
  • Purplebricks.com, an online start-up in the UK, received £7m investment in exchange for a 30% stake in a funding round led by former Invesco Perpetual fund manager Neil Woodford. The company aims to offer a low cost, 24/7 alternative to bricks and mortar estate agencies. Previous investors include DN Capital, Alchemy Partners and Paul Pindar, the retired CEO of Capita.
  • Swedish investment company Kinnevik announced that it has entered into a definitive agreement with Rocket Internet and other co-investors to combine five leading fashion e-commerce businesses: Dafiti (Latin America), Jabong (India), Lamoda (Russia & CIS), Namshi (Middle East) and Zalora (South East Asia & Australia) will combine to create new fashion e-commerce business Global Fashion Group (“GFG”);
  • Shares in online retailer ASOS were also buoyed last month by speculation that Amazon or eBay may be weighing up a bid for the company, following rumours that its major 27.4% shareholder – Bestseller, the Danish privately-held, family-owned clothing firm – has been approached by a US buyer.

Clearwater International’s Consumer team has advised on a number of e-commerce transactions over the past 18 months including the sale of Lenstore to GrandVision BV, the strategic merger of Party City Inc in the US and UK-based Party Delights, and the sale of Petmeds to MedicAnimal.

We have a number of e-commerce projects in progress and expect to see plenty more opportunities for deals in the coming months.

 

Other UK Deal Highlights

Walgreen Company has exercised its option to acquire a 55% stake in Alliance Boots GmbH from AB Acquisitions Holdings Ltd.

DFS Furniture Company Ltd has acquired Dwell Retail Ltd, a company that designs and sells furniture and home accessories. Post-acquisition, Dwell Retail will operate independently.

Marathon Asset Management LP, the US-based asset management company, has acquired 11 hotels from Queens Moat Houses UK Ltd for a consideration of £130m. The transaction involves the sale of 11 hotels out of 15 which are run and operated by QMH UK. The acquired hotel portfolio includes 2,000 rooms within three Crowne Plaza hotels, seven Holiday Inn hotels and one Best Western PLUS under franchise agreements with InterContinental Hotels Group. The acquisition is in line with Marathon’s strategy to make investments in the hospitality sector in the UK and continental Europe.

Sankaty Advisors LLC, the US-based hedge fund sponsor and a subsidiary of US-based private equity firm Bain Capital LLC, has agreed to acquire Cameron House Loch Lomond Ltd, De Vere Slaley Hall Ltd, De Vere Mottram Hall Ltd, Dunston Hall Ltd, Belton Woods Hotel Ltd and Oulton Hall Hotel from De Vere Group Ltd for an undisclosed consideration. De Vere Group is a UK-based hotel chain owner and operator, and a subsidiary of Lloyds Banking Group plc.

Park Resorts Ltd, a portfolio company of Electra Partners with operates holiday parks and family caravan sites, has acquired South View Leisure Park and Manor Park from Bluebird Capital Partners LLP for a consideration of £49m. Under the terms, Electra invested £20m and was partly financed by an integrated debt facility provided by Investec. This acquisition cements Park Resorts’ position as the largest operator of holiday parks in the UK and is part of Electra’s strategy of consolidation in the fragmented holiday parks sector.

Tony Wilkinson, Lisa Wilkinson and Christine Wilkinson have acquired a 50% stake in Wilkinson Hardware Stores Ltd, the UK-based retailer of hardware that operates home furnishing stores, from Karin Swann and Peter Swann. The transaction reportedly values Wilkinsons at £500m. Post-acquisition, Wilkinsons will be wholly-owned by the acquirers. WHSL reported revenues of £1.53bn and pre-tax profits of £27.5m in 2013, and has 372 stores with a workforce of around 23,000 employees.

Mark Palios and Nicola Palios have agreed to acquire an undisclosed controlling stake in Tranmere Rovers Football Club Ltd (Tranmere), for an undisclosed consideration. Mark Palios is the former CEO of The Football Association.

Crafter’s Companion Ltd has sold its UK-based Beader’s Companion beads retailer business unit to Beads Direct Ltd, the craft supplies specialist. No further details were disclosed.