JSE-listed retail big Woolworths Holdings Limited (WHL) on Monday confirmed the sale of its Australian division retailer chain David Jones in a Sens announcement, because it seems to be to prioritise is core South African operations.
It didn’t instantly reveal the worth of the take care of Anchorage Capital Partners, nevertheless, native media in Australia and Bloomberg have reported that deal to be value round A$130 million (simply over R1.5 billion).
Woolworths, nevertheless, did be aware that the sale will at the very least relieve the group of R17 billion value of liabilities tied to the David Jones model.
The group added that it expects the ultimate proceeds of the sale to exceed its present carrying worth of David Jones property.
“WHL is pleased to announce that the group has entered into an agreement to sell its entire shareholding
in its Australian subsidiary David Jones to Anchorage Capital Partners, an Australian private equity fund,” its Sens famous.
“As part of the transaction WHL will retain ownership of the flagship property asset in Bourke Street, Melbourne, which will be leased to David Jones on a long-term basis on market-related terms. A transitional services agreement will remain in place for a period of time to ensure an orderly separation of David Jones from the group [WHL],” it mentioned.
“The agreement is subject to terms and conditions customary for transactions of this nature, and WHL anticipates the transaction to complete by the end of March 2023, with the final proceeds to be determined based on completion accounts to be prepared in due course pursuant to the agreement,” Woolworths added.
“The transaction will materially improve the return on capital of the group by further transforming its balance sheet through the removal of circa R17 billion in liabilities relating to the David Jones store portfolio,” it mentioned.
“Importantly, this also enables the reallocation of capital and management focus towards value- accretive initiatives across other areas of the group.”
The South African retailer’s journey with the Australian model of shops involves an finish virtually a decade after
tying the knot in 2014, in a deal value round A$2.15 billion on the time.
Since then, the wedding has been marked by a number of challenges together with David Jones making losses for many
of these years.
Woolworths’s struggles with the model peaked with the appearance of the Covid-19 pandemic, which plunged Australia’s oldest division retailer chain into larger losses. The SA retailer did make efforts to show its Australian enterprise round within the final two years, chopping down on losses considerably.
“This is a major milestone in the repositioning of Woolworths for growth, while simultaneously improving return on capital for our shareholders,” Woolworths CEO Roy Bagattini mentioned in a press release on Monday.
“The strategic rationale at the time of the acquisition did not materialise to the extent originally
envisaged.”
“While David Jones has successfully executed on its turnaround, notwithstanding the Covid-19 disruptions, now is the right time for the business to operate under new ownership, while Woolworths refocuses on its core South African and Australian Country Road Group businesses,” he added.
Commenting on the deal in the identical assertion, an unidentified Anchorage Capital Partners spokesperson mentioned: “David Jones has a storied history, immense brand value and unparalleled assets―including an attractive retail footprint, a loyal customer base, and dedicated employees.”
“We look forward to working closely with CEO Scott Fyfe and the talented David Jones management team on
the next phase of its transformation.”