Brait SE to buy 90% of UK retailer New Look

15 May 2015 - 12:10 By Janice Kew and Sam Chambers
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Billionare businessman Christo Wiese on June 12, 2012 in Johannesburg, South Africa.
Billionare businessman Christo Wiese on June 12, 2012 in Johannesburg, South Africa.
Image: Hetty Zantman

Brait SE agreed to buy U.K. women’s clothing retailer New Look for 780 million pounds ($1.2 billion), the second acquisition in a month for South African billionaire Christo Wiese’s investment company.

Brait will buy about 90% of New Look primarily from two private-equity firms, Permira Holdings Ltd. and Apax Partners LLP, the investment company said in a statement Friday. New Look’s management and the family of founder Tom Singh will own the rest, according to the statement.

Brait is diversifying out of its traditional market after gaining cash from the R26.4 billion-rand sale of a stake in Pepkor Holding Pty Ltd. last year. Wiese, a 73-year-old retail magnate who is the largest shareholder in Brait, said last month the company had $2 billion to spend on deals after it agreed to pay 682 million pounds for 80% of Virgin Active.

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“Christo Wiese has been able to drive quite a hard bargain,” said Nick Bubb, an independent retail analyst in London. “Apax and Permira were desperate to sell. Whether New Look’s recent revival can be sustained is another matter, given the surplus capacity in the U.K. fashion market.”

Brait shares rose as much as 3.4% in Johannesburg. They have gained 19% this year, valuing the company at about R48 billion. That compares with an 8.9% increase on the FTSE/JSE Africa All-Share Index.

The retailer, which sells dresses for as little as ₤3 and lace underwear from 2 pounds, has about 1 billion pounds of debt, and the acquisition price gives the company an enterprise value of ₤1.9 billion. The most expensive womenswear item on its website is a fake mink-lined fur coat for ₤89.99 (R1,674).

Wiese owns 35% of Brait and spent much of his career in retail. He also has a 4,000 hectare winery in the Western Cape.

New Look said in February it was ready for an initial public offering amid speculation that Apax and Permira were seeking a buyer. They backed Singh’s 2004 buyout of the retailer, which postponed IPO plans in 2010 amid weak consumer confidence.

The company has 809 stores, two-thirds of which are in the U.K. Earnings excluding one-time items were 211 million pounds in 2014 and revenue was 1.4 billion pounds. Earnings for the 12 months through March are expected to be released on June 2.

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Brait said New Look has strong prospects in France, Germany, Poland and China. The company also sells via its online platform and delivers worldwide for free on orders of more than 55 pounds.

The retailer plans to have 70 Chinese stores by the end of the next financial year, Chief Executive Officer Anders Kristiansen said in February. The retailer exited Russia last year due to political turmoil.

Shareholders have pressured Brait to look for targets since it agreed to sell its stake in Pepkor to Steinhoff International Holdings Ltd. in South Africa’s biggest takeover in more than a decade.

The company will fund the purchase using facilities and cash on hand, Brait said. The transaction isn’t subject to regulatory approvals and is due for completion on June 25, it said. Rand Merchant Bank and Nomura International Plc advised Brait on the acquisition.

 - With assistance from Jillian Ward in London and Chris Spillane in Johannesburg.

- Bloomberg

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