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Footgear takeover by equity firm approved

Published: 22nd Jul 2019
Author: Tony Dickson - S&V Editor

Edcon deal will take it to close to 200 stores
Cape Town, W Cape, SA – A lot of things have come together for retailer Footgear in the last 2 months.
       On June 6, Old Mutual Private Equity (OMPE), the direct private equity investing arm of Old Mutual Alternative Investments, announced the acquisition of a majority interest in Footgear, subject to approval by the Competition Commission. On Friday, the commission recommended to the Competition Tribunal that the merger be approved unconditionally.
       On July 15, Footgear announced that it has acquired the Edgars Active and High Key chain stores from Edcon, subject to commission approval.
       CEO Neil Stephens replied to questions from S&V about the Edcon deal:

Does this still have to be approved by the Competition Commission? Yes – as per the press release – not sure of timing unfortunately – but hopeful for completion pre peak Nov/Dec season. We are confident especially from a job preservation perspective as there will be no job losses, and even as a combined entity we are a small percentage of the market.

Are the Edgars Active merchandise and brands similar to Footgear's merchandise and brands? There is good crossover of the brands – the likes of Nike, Adidas, Puma, and Converse, and we are looking forward to working with all our suppliers to develop these relationships further.

Are you taking over 180 stores or will your total now be 180 stores? The combined total will be approximately 180 - 200 stores.

Was this deal motivated by Old Mutual's role as a landlord? No, old Mutual is the landlord in only one location. As per the first press release the OM private equity (OMPE) investment was typical private equity – buying into a successful enterprise with high growth potential. The attraction to us was the OM brand and reputation, as well as their track record in previous private equity transactions (The Pro Shop, Cycle Lab, Tiger Wheel and Tyre, Pep, Ackermans, to mention a few), and of course the availability of capital to pursue our growth ambitions which included Edgars Active.

Do you feel you have taken over intrinsically sound businesses, or do you feel they will need a lot of work? The EA business is very similar to ours from a target market and brands perspective, and the stores are very well located, and a great geographical fit with our existing stores – 95% of their stores are in locations were we are not, thereby giving us an excellent nationwide reach, and they have good people. So we see it as a great opportunity. What is High Key? This comprises of about 8-10 stores within the EA stable recently rebranded “High Key” offering a very different look and feel to the existing EA brand, which we will assess and we could possibly roll out as a separate chain after we have bedded down the first phase.

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