The first 5 months of 2012 have seen plenty of deal activity in UK fashion retail. This has largely been triggered by the fallout from weak consumer spending, sending vulnerable businesses into administration. A flurry of deals have taken place involving famous names and high street stalwarts, which have been acquired cheaply by investors, quick off the mark to recognise the potential value of a turnaround.
One of the first to fail was Peacocks Group, the Richard Kirk backed value retailer, whose Bon Marche chain was acquired by Sun European Partners in January. Almost 400 Peacocks stores were then rescued by UK retailer, Edinburgh Woollen Mill, which also bought Jane Norman out of administration last year. EWM is controlled by Phillip Day a veteran retailer on the UK High Street, who believes Peacocks could become as big as it was before it went into administration and says he is “in it for the long term”.
Also at the start of the year, Lion Capital reached the end of the road with La Senza. The UK lingerie chain was bought from the administrators by Kuwait based retail group, Alshaya Group. March saw Sports Direct acquire UK street brand Firetrap after World Design and Trade filed for administration. Another famous name, Jaeger, was acquired by Jon Moulton’s Better Capital after struggling to re-establish itself as a market leading women’s brand. This followed the company’s untimely purchase of Aquascutum, which has now been acquired from administration by Hong Kong based YGM, owner of the licensing rights to the brand in Asia.
As well as offering bargains, current market conditions are giving the opportunity for both trade and PE buyers to invest in and grow brands such as Sun Capital’s deal with Jacques Vert at the end of 2011. Sun Capital also acquired Alexon in 2011 and now has a significant stable of mid- market women’s brands including Kaliko, Eastex and Dash – the plan being to develop distribution and sourcing synergies across the businesses. Gieves and Hawkes another long established traditional British brand has also been snapped up by Hong Kong menswear group, Trinity Limited. Here the focus is on growth in Asia where the appetite for great British heritage brands continues apace, as well as restoring profitability.
All these transactions were of fundamentally good brands which had got into trouble either because the balance sheet had been overgeared or the errors of past decisions had left the trading operations vulnerable to a downturn. By solving the gearing, restructuring the cost base and rejuvenating the brand there is opportunity for these businesses to become financially successful once again.
Vitruvian Partners LLP, Index Ventures, Greylock Partners and Redpoint Ventures acquired an undisclosed stake of Just Eat Ltd, the UK based online service provider of takeaway food, for £39m. The investment will be used to growth, entries into new countries and product innovation.
Accell Group NV, the Netherlands based company that manufactures bicycles, bicycle parts and accessories and fitness equipment, acquired Raleigh UK Ltd, a bicycle manufacturer, for £62m. The brands Raleigh and Diamondback are complementary to Accell. The acquisition enables Accell to strengthen its positions in North America, UK and Asia. Post acquisition, the transaction is expected to contribute to Accell EPS. Accell will realize significant potential synergies and purchasing advantages.
Augmentum Capital LLP acquired 37.5% stake in IJM Enterprises Ltd, an online retailer of bathroom furniture for £7.5m.
BRITA GmbH, the Germany based company that manufactures drinking water filters, acquired 50% stake in Vivreau LTD, a supplier of purified drinking water systems. The acquisition is in line with Brita’s strategy to expand and further grow and provide better products and services to domestic and international customers.
Better Capital Ltd, acquired 90% stake in The Jaeger Company Ltd, a chain of fashion stores for women for £19.5m.
Westland Horticulture Ltd, a provider of horticulture products, acquired majority stake in Cranswick Pet Products, a manufacturer of pet products mostly of wild bird, pigeon and small pet care products, from Lloyds TSB Development Capital for £18m. The acquisition will help in improving Westland’s existing business and reinforce their strategy of delivering unique products.
Trinity Ltd, the listed Hong Kong based retailer of high-to-luxury end menswear, and a subsidiary of Li & Fung Limited, acquired Gieves and Hawkes, a UK retailer and wholesaler of men’s wear for £32.5m. The acquisition will enable G & H to improve its brand, accelerate its growth and expand its business in Europe and Asia.
OpCapita LLP acquired all UK based 333 stores of The Game Group Plc, the listed UK based retailer of computer software and video games.
Vue Entertainment Ltd, a movie theaters operator and portfolio Company of Doughton Hanson, acquired Apollo Cinemas Ltd, a movie theaters operator, for £20m. The transaction is in line with Vue’s strategy of aggressively acquiring assets in the UK.
YGM Trading Ltd, the listed Hong Kong based retailer of apparel, acquired Aquascutum Group Ltd, a retailer of branded clothes, for £15m. The acquisition will enable YGM Trading to enhance its footprint in the European region and thereby strengthen its position. YGM Trading will work towards the development of Aquascutum enabling it to sustain itself in the cut-throat retailing segment.
Endless LLP, acquired Bathstore.com Ltd, a retailer of bathroom products, from Wolseley Plc for £15m. In 2011, Bathstore generated a turnover of £95m and an EBITDA of £6.5m. The transaction is in line with Wolseley’s strategy to concentrate on its core businesses activities.
First Milk Ltd, a producer and supplier of milk, cheddar, pre-biotics, cheese, milk powders, and dairy ingredients products, acquired CNP Professional Ltd, a sports nutrition company. The acquisition of CNP Professional by First Milk has given CNP a secure future and has great potential to help them in having a sustained and continuing growth in the long run. First Milk looks forward to this transaction as a driving force to success in the functional foods market with respect to the booming sports nutrition sector and thereby earn more cash for its farmer shareholders and adding value to the existing business.
The management of Iglu.com and Growth Capital Partners LLP have acquired the company from Matrix Private Equity Partners in a £19m management buy out of the company. Growth Capital Partners will take a significant minority stake in Iglu.com and provided debt and equity to Iglu’s management in the transaction.
All Leisure Group Plc, a listed tour and cruise operating company, acquired Page & Moy Travel Group Ltd, a travel agent and tour operator for £4.2m. The acquisition will enable All Leisure to expand its business and enter into new markets and enable both the companies to reduce their cost of transportation and also provide better customer services.
The management of Shoon Ltd, a company which owns and runs retail stores that sell shoes, leather goods and accessories, acquired the company in management buyout transaction backed by GA Europe. The transaction will enable Shoon to recover, sustain and further grow.
Ennismore Capital acquired The Hoxton Hotel, a hotel providing accommodation, restaurant and event facilities, from Quest Hotels Limited and Bridges Community Ventures Ltd for £65m. This acquisition was in line with Ennismore’s strategy to develop the Hoxton concept as a full fledged chain in Britain and also in over-seas market.
Bright Food (Group) Co Ltd, a China based company engaged in food, real estate, service, tourism, and urban industries, acquired a 60% stake in Weetabix Ltd, a company producing and selling breakfast cereals and bars, from Lion Capital LLP for £1.2bn. Weetabix employs approximately 1,800 people and generated sales of over £460m in 2011. The acquisition will enable Bright Food to expand its business in UK and in the international market. The acquisition will help Weetabix to strengthen its business in China.