Nompumelelo Magwaza
THE SALE of some furniture divisions under the troubled Ellerine Holdings was under way, with Dial-a-Bed being the first on the list.
This transaction has answered some of the questions asked by retail analysts on who was going to buy furniture stores under Ellerines after it was put under business rescue due to the collapse of its parent company, African Bank Investments Limited (Abil).
Through the group’s continued poor performers, Abil incurred losses amounting to R3 billion since 2009. In the 2013 financial year, Ellerines incurred losses of R1.1bn.
Well the answer is, Coricraft, a privately owned furniture retailer.
Yesterday, the Competition Commission approved the acquisition of Dial-a-Bed with conditions meant to address possible employment effects.
Another potential buyer could be the JSE-listed Lewis Group, which has indicated interest in acquiring some of the Beares stores.
Other Ellerines brands include Ellerines stores, Furniture City, Geen & Richards and Wetherlys.
Dial-A-Bed employs about 200 people in its stores, 18 of these employees were working in stores which had been identified by Ellerines as non-viable stores.
Abil was placed under curatorship in August because of its own financial troubles.
The commission said the sale of Dial-a-Bed was as a result of the business rescue process. The practitioners involved believed that the sale of some of Ellerines’ assets might yield a better outcome than an immediate liquidation.
It also took into account that if Ellerines faced liquidation, this would result in the retrenchment of the entire 7 060-strong workforce.
Acting deputy commissioner Hardin Ratshisusu said: “This transaction saves a substantial number of jobs and provides certainty for the affected employees.
“In addition, the commission imposed conditions to address potential job losses.”
The commission’s disapproval would have affected about 200 jobs.
“Considering these circumstances, the commission found that the proposed transaction offers an opportunity to save jobs.” he said.
Despite the transaction’s proposed job-saving condition, Coricraft has identified 18 employees in the non-viable stores who might be negatively affected and made an undertaking to offer employment to these employees.
It said in a statement that Coricraft was active in the broad furniture market, including the sale of bed sets and mattresses, which complemented Dial-a-Bed’s business.
“Therefore, the proposed transaction presents a horizontal overlap with respect to the sale of bed sets and mattresses,” the commission said.
It found that such a transaction was unlikely to substantially prevent or lessen competition in the sale of bed sets and mattresses in South Africa.
“This is because there are a number of players that will continue to constrain the merged entity, thus presenting alternatives to customers,” the commission added.