WOOLWORTHS HOLDINGS LIMITED - ACQUISITION OF THE WITCHERY GROUP BY COUNTRY ROAD LIMITED

ACQUISITION OF THE WITCHERY GROUP BY COUNTRY ROAD LIMITED

 
Woolworths Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 1929/001986/06
Share code: WHL
ISIN: ZAE000063863
("the company" or "WHL")

ACQUISITION OF THE WITCHERY GROUP BY COUNTRY ROAD LIMITED

INTRODUCTION
Shareholders are advised that Country Road Limited ("Country
Road"), WHL's 88% indirectly owned subsidiary listed on the
Australian Securities Exchange ("ASX"), has entered into an
agreement to acquire the Witchery Group from Gresham Private
Equity for A$172 million ("the Transaction").

BACKGROUND ON THE WITCHERY GROUP
The Witchery Group consists of two complementary brands, Witchery
and Mimco.
Witchery is one of Australias leading fashion brands offering
womens, mens and kids apparel and accessories. With over 40
years of trading, it operates through 210 stores and concessions
in Australia, New Zealand, South Africa and Singapore.
Mimco is a leading Australian designer accessories brand offering
accessible luxury with a quirk. With an established brand in
bags, jewellery and other statement pieces, it has recently
expanded into shoes, sunglasses and watches. Founded in 1996, it
operates through 96 stores and concessions in Australia, New
Zealand and Singapore.
The Witchery Group delivered c.A$266 million revenue and c.A$34
million normalised EBITDA in the financial year 2011.

RATIONALE FOR THE TRANSACTION
The acquisition of the Witchery Group creates one of Australias
largest speciality fashion retailers with complementary brands and
a strong position in the mid to upper tier specialist retail
sector. The acquisition delivers an attractive portfolio of owned
brands, greater scale, diversified revenue streams and industry
leading margins.
The Transaction is expected to deliver synergies of approximately
A$10 million on an annualised basis, to be achieved over 4 years.
Australia's specialist apparel retail market is currently
estimated at c.A$12.1 billion. The country provides an ideal
retail apparel demographic with approximately 52% of the
population aged between 29-64, and a total population expected to
grow from 23 million to 35 million by 2050. Australia's apparel
market is currently at a cyclical low, providing an ideal
opportunity for Country Road to consolidate its position ahead of
the expected economic recovery.

FUNDING
The Transaction will be funded through a combination of
acquisition debt of A$92 million, raised from Australian banks
with no recourse to South Africa, and a renounceable rights issue
by Country Road to raise up to c.A$92 million of new equity. WHL,
as majority shareholder in Country Road, has provided an
irrevocable commitment that it will participate in its pro rata
share of the entitlement, providing Country Road with c.A$81
million of new equity under the rights issue. The company has
already received the requisite exchange control approvals from the
South African Reserve Bank.

APPOINTMENT OF NEW MEMBERS TO THE COUNTRY ROAD BOARD
We are pleased to announce that conditional and effective upon
completion of the Transaction, Iain Nairn, currently the CEO of
the Witchery Group, will take over as CEO of Country Road. Howard
Goldberg, the current CEO of Country Road, will be leaving Country
Road if the Transaction is completed, having provided strong
leadership and developed a strategy that has delivered solid
results in a challenging retail environment.

Oliver Kysela, currently the Chief Financial Officer of the
Witchery Group, will assume the role of Chief Financial Officer
and will be appointed to the Country Road Board.

In addition, Zyda Rylands, an Executive Director of WHL, will be
appointed to the Country Road Board, conditional and effective
upon completion of the Transaction.

Shareholders are referred to the announcement released by Country
Road on the ASX today, setting out full details of the Transaction
and rights issue. WHL will host a presentation on Thursday, 2
August 2012, at 10.00 SA time, which will be webcast live on
http://www.woolworthsholdings.co.za.

Cape Town
1 August 2012

Ian Moir (Group chief executive officer) on 021 407 2809
Norman Thomson (Group finance director) on 021 407 3337
InvestorRelations@woolworths.co.za

Sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)




 

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