Woolworths sells Dick Smith chain to buyout firm for $A20m
BUSINESSDESK: Australian supermarket operator Woolworths has sold its Dick Smith consumer electronics chain for $A20 million to private equity firm Anchorage Capital Partners.
The Sydney-based retailer expects to complete the deal this year and receive initial cash proceeds in the 2013 financial year with possible earn-outs from the future sale of the chain, the company says.
Woolworths took a $A420 million restructuring provision to divest Dick Smith this year, and will not face any future downside, it says.
"These businesses were a small part of Woolworths and this divestment will allow us to be fully focused on the core parts of our business," chief executive Grant O'Brien says.
Sydney-based Anchorage targets established companies with strong brands and an enterprise value of between $A50 million and $A150 million, according to its website. Last year it sold the New Zealand Burger King franchise to US private equity firm Blackstone.
Dick Smith Electronics operates 325 stores on both sides of the Tasman, with some 4500 staff. The New Zealand unit posted a 5.6% fall in annual sales to $321.8 million, with profit almost halving to $3.6 million in the 12 months ended June 30, 2011.
Woolworths also says it has agreed to sell its interest in Woolworths Wholesale in India for $A35 million.
The supermarket chain's shares rose 1.1% to A$29.28 yesterday and have gained 15% this year.