Harvey Norman Holdings have snapped up Clive Peeters and WA retail group Rick Hart for the basement price of $55M. The acquisition is tipped to add an additional $500M to Harvey Norman revenues.
The deal involves approximately 38 stores however speculation is mounting that some of these stores will be closed as part of a rationalisation by Harvey Norman. Six loss making stores were closed last month.
There is also speculation that Harvey Norman Holdings will trade as Clive Peeters and Rick Hart stores.
Former Clive Peeters CEO, Greg Smith, a former accountant who was also the largest shareholder in Clive Peeters, will get nothing out of the deal with the bulk of the Harvey Norman payment going to the National Australia Bank who last month appointed receiver Phil Carter from corporate advisory firm, PPB.
Late on Friday night Harvey Norman Chairman, Gerry Harvey, admitted that the retailer has always had an interest in buying out Clive Peeters, but the high cost of several leases associated with the stores meant that the better option was to let the stores go broke and then bid for the remaining assets with the lease liabilities.
Harvey told the Herald Sun in Melbourne: “We were always interested in Clive Peeters but we couldn’t make a bid for it or anything because they had a number of onerous leases,”
“So it had to go into receivership before you could actually negotiate some of those leases.”
Mr Harvey said it was no surprise that the business went bust and he was waiting to make his move on the company.”It’s been common knowledge for a long time that Clive Peeters is on the verge of insolvency,” he said.
Clive Peeters was forced into voluntary administration on May 19 by the National Australia bank who refused to extend the company’s borrowings. The debts of the retailer were over $160 million.
On June 11, receiver Phil Carter of PPB Pty Ltd said 75 jobs would be lost from the closure of six underperforming stores.
In a statement to the ASX on Friday, Harvey Norman said that it had agreed to buy “certain stock and plant and equipment located at certain of the locations, knowhow, intellectual property rights and systems”.
Harvey Norman is expected to take over about 30 stores under the Clive Peeters and Rick Hart banners. But nothing has been unveiled yet about three warehouses belonging to the company.
Mr. Carter was appointed as receiver by National Australia Bank in May. He closed six stores and finally the business was put up for sale.
Carter said that Harvey Norman has assured the receiver that it will be providing employment to the majority of Clive Peeters and Rick Hart employees.