Dick Smith finally sold to equity firm Anchorage Capital Partners for a cut price.
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Woolworths has sold the troubled electronics retailer to private equity firm Anchorage Capital Partners $20m, it announced today.
The sale announcement was made today as Woolies confirmed it has signed a share sale agreement with the Sydney based firm, with the transaction expected to be completed late 2012 following the satisfaction of conditions, a statement to the ASX confirmed.
Woolies first announced it would divest the company in November last year after a strategic review.
Under the sale agreement, Anchorage will purchase 100 per cent of the Dick Smith business in Australia and New Zealand, its 325 stores and 4,500 staff.
The equity group has appointed ex-Myer exec Nick Abboud as new CEO of Dick Smith, effective upon completion of the deal.
Woolies had been hoping for a far higher price but has been looking for a suitable buyer for several months now.
By comparison, Harvey Norman paid $55m for Clive Peeters chain with 32 stores in 2010, although the purchase has since proved to be less than a success.
Dick Smith recently announced FY12 earnings of $24.6bn – up 12% – and sales improved by 2.3% to $1.5bn.
The $20m will be paid to Woolworths during the FY13 and the retail giant may also benefit from any upside if the equity group choose to sell the retailer in the future.
Woolworths CEO Grant O’Brien said: “We announced the Company’s strategic priorities in November 2011 which included a review of our portfolio of assets, particularly our participation in the consumer electronics category, with a view to maximising shareholder value.”
“These businesses were a small part of Woolworths and this divestment will allow us to be fully focused on the core parts of our business.”
Phillip Cave, Chairman of Anchorage said the group was “impressed with the underlying quality of the business and sees Dick Smith as an ideal fit for our investment mandate of acquiring established businesses with strongbrands that can benefit from Anchorage’s proprietary approach to operational performance improvement.”
Cave also said Ancorage are “extremely pleased” with the agreement and are “confident in the long term success of the business.”
Abboud said he was “delighted” with his new role, adding “Anchorage and I see great potential in the Dick Smith business and I look forward to working with the team to fully realise these opportunities.”
The Dick Smith Board will now comprise of: Mr Cave as Chairman and Michael Briggs, a Partner at Anchorage, together with Abboud and Bill Wavish.
Woolies’ shares fell 0.92% to $29.01 after the announcement was made.
The retail giant also announced today the sale of Woolworths Wholesale, India, to Infiniti Retail (owned by Tata Sons) for A$35 million.