New Clicks sells Discom to Edcon for R369 million
Release Date: 2007/06/01
Cape Town – Specialist retail group New Clicks Holdings is to sell retail business Discom to Edcon for R369 million. Discom is an ethnic hair care and beauty retailer serving the lower to middle income customer market.
Group chief executive, David Kneale, said the core expertise of New Clicks is in meeting the needs of middle and upper income customers in health, beauty, home and entertainment retailing through Clicks, Musica and The Body Shop.
“Discom serves a different customer profile to the rest of our businesses and we believe its customer base can be better served by a company like Edcon which has a stronger focus on Discom’s target market through its discount division.”
“The sale of Discom will bring increased focus and simplicity to New Clicks. We are also reviewing our group services operations to ensure we have a cost-effective structure which drives accountability for delivery,” he said.
Discom has been sold as a going concern to Edcon and all existing staff will transfer to Edcon.
Kneale stressed that it would be ‘business as usual’ for Discom until the end of the New Clicks 2007 financial year in August when the sale was expected to be finalised. The effective date of the transaction is anticipated to be 3 September 2007 and is subject to standard regulatory and competition approvals.
The purchase price of R369 million includes all fixed assets, stock, goodwill and trademarks and may vary based on the final book value of fixed assets and stock on the effective date. The transaction will be settled in cash.
Kneale said the proceeds from the sale would be applied to reducing the level of the group’s shareholder funding, ultimately enhancing return on equity.
Discom was acquired by New Clicks in 1984 and has 165 stores nationally, employing over 1 700 staff. In the 2006 financial year Discom reported turnover of R1 077 million and operating profit of R34 million.