The group said it had acquired Phase Eight from TowerBrook Capital‚ which was exiting the business completely.
Foschini said in its rationale for the acquisition that Phase Eight had achieved consistent growth in sales and profitability.
It said the company satisfied four specific criteria in Foschini's expansion strategy namely:
- it had a good track record - being highly profitable and cash generative;
- it was a multi-channel business - with an established e-commerce platform (currently 17% of revenue);
- it had an experienced and self-sufficient management team; and
- strong growth prospects arising from its established position in the UK and opportunities to further expand in international developed and emerging markets.
"In addition‚ the Phase Eight acquisition will enhance the geographic diversification of the group by increasing its operating presence from eight countries to 26 countries and will give it the opportunity to take certain brands outside Africa using Phase Eight's proven expansion methodology‚" the group said.
Earlier this week Foschini released a trading update in which it said group sales for the nine months to 27 December 2014 rose 10.5%.
Foschini‚ which still generates less than half its sales from cash payments‚ did not disclose a breakdown between cash and credit sales for the period.
The retailer said Phase Eight had an impressive track record of growing sales (18.9% compound average growth over the past five years) and increasing market share and substantial earnings before interest‚ tax‚ depreciation and amortisation growth (27.5% compound average growth over the past five years).
At 9.53am‚ the share was up 0.70% to R145.76 valuing the company at about R30.8bn.
Source: BDpro via I-Net Bridge
