Consumer Sector Comment – August 2011

Date

Deals in this active space have involved acquisitions made by both corporates and new investments by private equity investors.

The corporate acquisitions have seen trade buyers seeking to add to their core product offer by adding new services/business models that have become possible because of the web. Examples include:

  • Amazon’s acquisition of Book Depository with the Book Depository’s expertise in sourcing rare titles and out of print books and delivering them worldwide in 48 hours.
  • Photobox’s acquisition of Moonpig which will enable Photobox to broaden its product offer from personalised photo albums to the growing personalised greeting cards market.
  • Card Factory’s acquisition of GettingPersonal.com to provide an online presence in the increasingly important personalised gift market.

With Photobox and Card Factory both private equity backed and with Darwin Private Equity backing Euroffice in its acquisition of UK Office Direct, it is clear that private equity continues to be keen to invest in strong online businesses. These deals clearly show that businesses that are innovative market leaders in a particular niche or product category and have the right proposition and business model continue to grow and will attract investments in spite of the challenging conditions of the sector.

Clearwater Corporate Finance, in partnership with Barclays Corporate, held a business briefing seminar in Manchester in July to discuss the latest thinking in ecommerce and digital marketing strategies. The seminar was led by specialist online consultancy Cimex and covered topics such as audience targeting, content & creativity and analytics in order to react quickly to a continuously changing market. They also presented a checklist of all the things anyone setting up or improving an ecommerce operation should consider to improve it.

For more information about the seminar see our website or please contact us for any further discussion about M&A activities involving ecommerce. You can also follow us @CCFConsumer.

Deals

GettingPersonal.co.uk, the UK based online gift retailer, has been acquired for an undislosed sum by Card Factory, a UK based chain of greeting cards and gift stores backed by Charterhouse Capital Partners. The deal provided an exit for Livingbridge. After the completion of the transaction, GettingPersonal will launch the brand abroad and begin shipping orders overseas.

The Book Depository Ltd, an online retailer of books based in the UK, has been acquired by Amazon.com Inc, the listed online retailer based in the US, for an undisclosed value. The transaction is subject to customary closing conditions and regulatory approvals

Euroffice Ltd, an online office supplies business backed by Darwin Private Equity, has acquired UK Office Direct Ltd, a UK based online office supplies retailer for an undisclosed value. The Euroffice and UK Office Direct websites will continue to operate under their respective brands.

Cocosa Lifestyle Ltd, a UK-based online retailer of discounted designer labels, has been acquired by Mr Mohammed Al Fayed, a private investor, from Bauer Media KG, the magazine and radio group headquartered in Germany, for an undisclosed value.

PhotoBox Ltd, the UK based online digital photographic company backed by a consortium of investors that include Highland Capital Partners, Index Ventures and Harbour Vest, has acquired Moonpig.com Limited, an online card retailer based in the UK, for £ 120 million.

Equip Outdoor Technologies Ltd, a manufacturer of technical outdoor equipment and the parent company of Rab USA and Podsacs brands, has acquired Lowe Alpine, an international known brand of outdoor clothing and equipment, from Lowe Alpine International Srl, for an undisclosed value.

Ms Camilla Al Fayed, a private investor, has acquired a 51 per cent stake in Issa London Ltd, a luxury womenswear brand based in the UK for an undisclosed value. The label’s designer Ms Daniella Helaye retains a 49 per cent stake and remains as creative director.

Princes Ltd, the food and drinks group headquartered in the UK, has acquired certain assets and the operations of the canning business of Premier Foods Plc, a wholesaler of food products based in the UK, for £182 million

Blackstone Group, the listed US based private house firm, has acquired a 40 per cent stake in Tangerine Confectionery, a UK based sugar confectionary manufacturer for approximately £120m. The remaining 60% stake will be held by the management team.

WM Morton Ltd, a supplier of wine, beer and spirits based in the UK has acquired Inverarity Vaults Ltd, a supplier of wine, whisky and Cuban cigars based in the UK from Hamish Martin, the UK based private firm. Details of the transaction were not disclosed. This acquisition is in line with the strategy of WM Morton to expand its wine and whisky supply business in Scotland. Inverarity’s expertise in the wines combined with WM Morton’s power, financial strength and composite drinks offering will enable both the companies to strengthen their position in the Scottish wine industry. After the completion of the deal, Hamish Martin will join the board of WM Morton. Inverarity will continue to operate autonomously and will be merged with Cheviot Fine Wines, a subsidiary of WM Morton.

Sports Direct International Plc has acquired an 80 per cent stake in West Coast Capital (USC) Ltd, a fashion retailer based in the UK, and in Cruise Clothing Limited, a luxury retailer based in the UK. for £7 million. Sports Direct will provide a facility of up to £20m to enable the existing management teams to develop the two businesses.

Sharps Bedroom, the bedroom furniture division of Homeform Group Ltd, has been acquired by Sun Capital Partners Inc, a private equity firm based in the US for £7.5 million.

The Capital Pub Company Plc, a listed UK based pub chain, has been acquired by Greene King Plc, a listed pub chain headquartered in the UK for approximately £ 93 million. The acquisition is in line with Greene King’s aim to accelerate its retail expansion strategy and increase its geographical presence in the greater London region.

Uniq Plc, a listed convenience foods producer based in the UK, has been acquired by Greencore Continental Convenience Foods, a convenience foods producer based in the Netherlands, for approximately £113 million. The transaction is expected to be completed by the end of September 2011. The acquisition will strengthen the Greencore’s Food to Go business by building further scale in sandwiches, and by establishing Greencore as a more significant supplier in the salads marketplace. It will also provide Greencore with a platform to build out a stronger and more broadly based chilled desserts business.

The management of Original Additions Ltd, a beauty products manufacturer for professional and retail markets based in the UK, has acquired the company in a secondary management buy out transaction, backed by the UK based private equity firm Lloyds TSB Development Capital Ltd (LDC), for an undisclosed value.

The management of Menzies Hotels Group Ltd, an operator of a chain of four star hotels based in the UK, has acquired the company in a management buyout transaction, backed by Lloyds Banking Group Plc.

Assura Pharmacy Ltd, a pharmacy operator based in the UK, has been acquired by Gorgemead Ltd, a member of the Cohens Group, for approximately £39 million.

Holidaybreak Plc, a campsite operator and travel agency based in the UK, has been acquired by Cox & Kings Ltd, a travel company based in India. The acquisition adds new product areas and markets to Cox & Kings, providing opportunities that will leverage Cox & Kings’ global network and accelerate the development of both Holidaybreak and Cox & Kings’ businesses.