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Update on the acquisition of Power Fashion
Mr Price Group Limited
(Registration number 1933/004418/06)
Incorporated in the Republic of South Africa
ISIN: ZAE000200457
LEI number: 378900D3417C35C5D733
JSE and A2X share code: MRP
(“Mr Price Group” or “group”)
UPDATE ON THE ACQUISITION OF POWER FASHION
Fulfilment of suspensive conditions
Shareholders are referred to the group’s SENS announcement on 26 November 2020 which communicated
the conclusion of an agreement to acquire high performing value retailer, Power Fashion, which currently has
173 stores across Southern Africa.
Power Fashion is a value-focused and cash-based retailer, servicing low to middle income households. It offers
merchandise for the whole family, retailing largely apparel merchandise, which is fashionable, but not fashion
forward. It focuses on the deep value segment of the market and its price positioning is strongly aligned to its
target customer base.
All suspensive conditions, including approval by the South African and eSwatini competition authorities, have
been fulfilled and the acquisition is effective on 1 April 2021.
Investment Case
The group’s strategic research undertaken last year identified opportunities for growth in South Africa, both
organic and acquisitive. The price-value market in the apparel segment in which Power Fashion operates, was
one such segment with attractive growth potential.
Mr Price Group has frequently communicated to shareholders its strict investment criteria for an acquisition,
which has guided it as it has considered several opportunities in the last year. In Power Fashion, the group will
acquire a business that meets each of these closely researched criteria:
- Value focused business that predominantly trades in cash and is aligned to the group’s core
capabilities
- Fits within the group’s capital allocation strategy and is bolt-on in nature (the size of the transaction
is currently 3%- 4% of market capitalisation)
- High performing business with a strong track record, eliminating the need for any turnaround
strategy and avoiding the associated management distraction and integration costs
- An existing business of attractive scale which is available at a reasonable valuation. Immediately
earnings accretive and not dependant on synergies
- Opportunity for significant future growth in footprint and categories
- Strong management and skilled team to maintain focus and ensure continuity
Mr Price Group CEO, Mark Blair, said: “I am really excited about the opportunities that exist for Power Fashion,
which is a quality business, however I am more excited about welcoming new associates to the Mr Price
Group. We enjoy a similar entrepreneurial culture and the fit will be excellent.”
CONTINUED OPERATIONS
The existing Power Fashion management team and employees will transfer to the Mr Price Group on the
effective date. As previously indicated, Power Fashion’s majority shareholder and CEO, Noel Otto, will retire
on the effective date but will consult to the newly appointed Power Fashion managing director for a period to
provide continuity.
Mr Price Group will incorporate Power Fashion’s financial performance in its financial reporting at its FY2022
trading update in August 2021.
Durban
30 March 2021
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 30-03-2021 07:05:00
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