DURBAN - THE JSE-LISTED clothing and home goods retail company Mr Price Group was given the green light to acquire value-focused and cash-based retailer Power Fashion after meeting all the regulatory conditions in South Africa and eSwatini.
The acquisition was first announced in November last year and is effective as of tomorrow and it is Mr Price’s first acquisition in nearly 30 years.
Mr Price Group chief executive Mark Blair said yesterday Power Fashion fits in well with the group as both companies shared a similar entrepreneurial culture.
“I am really excited about the opportunities that exist for Power Fashion, which is a quality business.
“However I am more excited about welcoming new associates to the Mr Price Group. We enjoy a similar entrepreneurial culture and the fit will be excellent,” Blair said.
Power Fashion operates 173 stores across southern Africa and is servicing low- to middle-income households.
“It offers merchandise for the whole family, retailing largely apparel merchandise.
“It focuses on the deep value segment of the market and its price positioning is strongly aligned to its target customer base,” the group said.
The acquisition comes after Mr Price undertook strategic research last year and identified opportunities for growth in South Africa, both organic and acquisitive.
Mr Price opted for the Power Fashion acquisition after having considered a number of opportunities, and it said in Power Fashion the group would acquire a business that met each of these closely researched criteria.
The group said the price-value market in the apparel segment in which Power Fashion operated was one such segment with attractive growth potential.
Power Fashion’s value focused business that predominantly trades in cash and aligned to its core capabilities caught the attention for Mr Price.
Mr Price said the acquisition also fit within the group’s capital allocation strategy and its bolt-on in nature, with the size of the transaction currently 3 to 4 percent of market capitalisation.
Mr Price values Power Fashion as a high performing business with a strong track record, eliminating the need for any turnaround strategy and avoiding the associated management distraction and integration costs.
The group said the acquisition was immediately earnings accretive and not dependant on synergies and it had significant growth opportunities, with a strong management team to maintain focus and ensure continuity for the business.
Power Fashion’s majority shareholder and chief executive Noel Otto will retire tomorrow, but he will consult to the newly appointed Power Fashion managing director for a certain time to provide continuity while the existing Power Fashion management team and employees will transfer to the Mr Price Group tomorrow.
Mr Price said it would incorporate Power Fashion’s financial performance in its financial year 2022 trading update in August.
Mr Price shares closed 1.95 percent lower at R194.25 on the JSE yesterday.
BUSINESS REPORT