Unlisted retail group Edcon will offload its 167-store stationery chain CNA to a consortium led by JSE-listed and Mauritian-based Astoria Investments for an undisclosed amount.
The deal, which is subject to normal regulatory approvals, was announced by Edcon on Tuesday. It comes as the group continues its restructuring to turn the struggling business around after securing a R2.7 billion recapitalisation lifeline in March last year from the Public Investment Corporation, existing lenders and several of its landlords.
Edcon, which also owns retail chains Edgars and Jet, said in a statement that the sale to the Astoria-led consortium is aligned to Edcon’s broader strategy to focus on its core business. This includes the realignment of its retail brands and operations.
It said the transaction includes all brands and trademarks under the CNA business, which means the business would be able to continue to trade under the CNA brand.
The sale of CNA does not come as a surprise as several retail analysts have mooted Edcon selling the stationery chain as it did not fit in with the retail group’s largely clothing-focused business. Calls for Edcon to dispose of its CNA unit were made again last year when the cash-strapped group managed to secure the recapitalisation lifeline.
Commenting on the deal, Edcon CEO Grant Pattison said that as part of a simpler business model the group is optimising its store portfolio to focus on its three divisions: Edgars, Jet, and its Thank U customer loyalty and financial services division.
“The ongoing process of consolidating, merging and rebranding of the businesses will ensure an offering of a selected set of private and some international brands, while also being a fashion and beauty retailer that provides credit,” he said.
“As I have always said, CNA is an important but not a strategic part of the Edcon business, as it is not focused on clothing, beauty and home categories, and we would only sell if it’s good for CNA.
“The new owners have the muscle and extensive management focus and leadership expertise to invest in the business,” said Pattison.
“I am also pleased that this transaction will not result in any job losses.”
Edcon said that the Astoria consortium, led by Jan van Niekerk, intends to focus CNA on the original building blocks of its founders, with books, stationery, magazines and gifting at its core.
Astoria Investments, which has a market cap of just over R280 million on the JSE, said in a brief statement that it believes the transaction will be welcomed by its staff, landlords and suppliers, including publishers, both locally and internationally. Its share price was up 1.32% on the JSE on Tuesday, closing at R2.31.
CNA was formed in 1896 by two newspaper sellers in Johannesburg and was acquired in 2002 by Edcon, which was listed on the JSE at the time.