The Foschini Group (TFG) has entered into an agreement to buy certain commercially-viable stores and selected assets of Jet, a clothing retail division of embattled Edcon, for a cash purchase consideration of R480 million.
The retail giant announced on Sens on Monday that it had sent a proposal to Edcon on July 10, and the business rescue practitioners have accepted its offer.
“TFG has been granted exclusivity to negotiate and finalise the terms and conclude the proposed transaction. JET is a leading Southern African retailer – by brand recognition and market share – and would provide TFG with a strategically important expansion into the value segment of the Southern African retail apparel market,” it says.
TFG adds that the proposed transaction enables it to acquire selected parts of the JET business – an opportunity previously not possible and expected to give it significant scale at an attractive price.
It says the proposed transaction construct provides TFG with structural risk mitigants:
- It will include the transfer of selected key Jet executives and staff “to ensure sufficient management capacity and continuity to deliver on the current turnaround plan for Jet”;
- The acquisition of the Jet brand and rights to the Jet Club;
- The assumption of a minimum of 371 commercially-viable Jet stores which include a distribution centre located in Durban, South Africa and certain stores in Botswana, Lesotho, Namibia and Eswatini;
- The acquisition of the associated property, plant and equipment for the commercially viable stores and the Durban distribution centre;
- All existing stock holdings with a minimum stock value of no less than R800 million — “if the value of the stock on hand is less than the minimum stock value at the closing date. TFG will proportionately adjust the purchase consideration by the percentage by which the actual stock value is less than the minimum stock value.”