Competition Tribunal approves sale of Edcon's assets to Footgear
Companies / 20 September 2019, 11:30am / Banele Ginindza
JOHANNESBURG - The competition Tribunal yesterday approved the sale of some of struggling retailer Edcon's assets to Footgear without any conditions.
The tribunal gave a thumbs-up to offloading of Edgars Active and High Key brands to upcoming fashion retailer Footgear -a subsidiary of Old Mutual Private Equity (OMPE) - for an undisclosed amount.
The transaction paved the way for Edcon to complete its restructuring.
It would also give Footgear a nationwide footprint with more than 200 stores and an edge over struggling Tekkie Town, the footwear retailer hamstrung by ownership agreements relating to the infamous Steinhoff group.
Edcon chief executive Grant Pattison said the sale would afford the group an opportunity to focus on fixing the business and implementing its survival plan, which might include closing a third of its stores in the next two years.
Pattison said the group would now be rebuilt around Edgars and Jet on the retail front and Thank You on the financial services side.
“Our efforts will now be focused on improving our products, services and prices,” Pattison said.
He said stationery and music retailer CNA would remain in the group, pending interest from potential buyers. He said there were no specific targets for the assets being jettisoned, but that an improvement in the economic landscape would be welcomed.
“The figures I would like to see are gross domestic product growth and consumer credit growth, those are the two numbers I would like to see improving,” Pattison said.
Edcorn is on rebuild mode and will assess its options after the Christmas retail sales.
More than 90percent of the acquired assets are in locations and provinces where Footgear does not have a strong presence.
OMPE, the investment arm of Old Mutual Alternative Investments, manages more than $4billion (R58.64bn) in assets across private equity, infrastructure and various impact funds in sub-Saharan Africa. Its acquisition of a majority stake in Footgear last month represents OMPE’s third investment into retail in SA, with the others being its stake in MoreCorp, which owns The Pro Shop, and Tiger Wheel & Tyre.
OMPE investment principal Chumani Kula said the deal would mark a significant milestone in Footgear’s expansion ambitions, propelling it to become a key player in the South African branded sport and lifestyle market.
“We look forward to supporting the management team as they roll out Footgear’s highly successful formula across all of the newly acquired stores,” Kula said.
A Footgear executive who declined to be named said the deal would ramp up its national presence.
“If we had carried on with our organic growth at 15 stores per year it would've taken us more than seven years to add the number of stores within the Edgars Active chain,” the executive said.