Deal Journal Australia

Country Road Buys Witchery Group For $180 Million

Australian retailer Country Road is buying Witchery Group from Gresham Private Equity for 172 million Australian dollars (US$180.2 million), looking beyond the nation’s current subdued consumer spending environment.
The Witchery Group is a fashion retailer with Witchery and Mimco stores across Australia, New Zealand, Singapore, South Africa and the United Kingdom.  In fiscal 2011, Witchery Group generated about A$266 million in revenue and about A$34 million in normalized earnings before interest, tax, depreciation and amortization.

News Limited

“The acquisition of Witchery Group creates one of Australia’s largest specialty fashion retailers with complementary brands and a strong position in the mid to upper tier specialist retail sector,” Country Road Chairman Ian Moir said in a statement.
The retailer reckons the acquisition could create significant shareholder value through synergies estimated around A$10 million on an annualized basis over four years.
Country Road will partly fund the purchase through a A$92 million capital raising which will allow shareholders to buy one new share for every two existing shares at an offer price of A$2.66, a 19% discount to the stock’s closing price Tuesday. The deal will also be funded through a new A$92 million five-year senior bank facility.
Rothschild-advised Country Road said its 88%-shareholder South African company Woolworths Holdings will take part in the capital raising and contribute about A$81 million of new equity.
“Woolworths South Africa obviously feel like it’s a good deal if they’re going to fully subscribe,” Country Road’s third-largest shareholder Nestor Hinzack told Deal Journal Australia, adding that he is supporting the equity issue.
“If the synergies stated come through, it’s a good deal and it’ll really broaden Country Road’s presence in the market,” added Mr. Hinzack.

 

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