Mr Price Group, which acquired both Power Fashion and Yuppiechef during the last two years, said that Studio 88 deal is in line with its plans to continue pursuing high growth opportunities with the vision of becoming the "most valuable retailer in Africa".
The inclusion of the Studio 88 Group would increase Mr Price’s annual revenue to over R28bn and would prospectively become the group’s second-largest of nine trading divisions. Mr Price’s store footprint would increase to more than 2,400 stores and the group would employ over 25,000 people.
The transaction will be fully funded through the existing cash resources of the group
A Sens statement by Mr Price noted that the Studio 88 Group is focused on consumers who make aspirational fashion choices, and the merchandise range is a mix of international brands – some of which are under exclusive license agreements – as well as private label ranges.
"The Studio 88 Group is highly cash generative and operates on a cash-only basis, which contributes to its value positioning. The management team of the Studio 88 Group has an impressive track-record of maintaining strong brand relationships and customer loyalty, delivering consistent earnings growth over the long term," Mr Price said.
According to Mr Price, the brands offered by the Studio 88 Group are complementary to Mr Price’s existing customer positioning and, combined, would deliver on the group’s strategic positioning across the fashion-value and aspirational value segments.
"With a diverse store footprint and a portfolio of differentiated store chain formats, the Studio 88 Group has broad appeal to aspirational and trend-conscious customers across a wide range of age profiles and affordability levels. Mr Price will benefit from growth opportunities in the menswear segment where it is currently under-represented," Mr Price said.
Mr Price group CEO, Mark Blair, said, “The partnership with Studio 88 Group gives Mr Price an ideal entry into the high-growth urbanwear and athleisure segments of the market, which present us with a significant non-competing channel. We will continue to be a predominantly private-label group, but our ‘Value Champion’ purpose can also be lived out through the aspirational fashion market, and we are very excited about these prospects.”
Blair continued, “What attracts us to the Studio 88 Group is their deep understanding of trend-conscious South African consumers and their ability to address their needs via their various trading formats. We also share a similar DNA, both being founder-led businesses intent on offering customers superior value and have high-performance cultures.”
The seven senior management team members who are shareholders will remain in their current roles and as shareholders.
Mr Price will acquire 100% of RMB Ventures shareholding in Blue Falcon and management will dispose of an effective 50% of their shareholding, enabling Mr Price to acquire the sale shares. Management’s retained shareholding will be acquired over a four-year period post-implementation of the transaction, based on the same historical multiple as the initial acquisition.
The transaction is subject to the fulfillment of both regulatory and commercial suspensive conditions, as are usual for such transactions, by no later than 31 October 2022. These conditions include competition authority approval in South Africa and other African territories.
