10th Apr 2015 06:45
LONDON (Alliance News) - Majestic Wine PLC said Friday it will acquire online wine retailer Naked Wines International Ltd for up to GBP70 million in cash and shares, with founder and chief executive officer of Naked Wines Rowan Gormley to head up the enlarged group.
Majestic will pay GBP50 million in cash, funded by new debt facilities, and up to GBP20 million of contingent consideration in shares.
In order to reduce its leverage and ensure it has sufficient working capital resources to invest in the business Majestic has decided to withhold its final dividend for the its current financial year 2015, and its interim dividend for the financial year 2016. It said it expects to progressively re-instate dividends by the financial year 2018.
The acquisition is expected to be enhancing to earnings in the financial year 2017, Majestic said.
Majestic said it expects to post an adjusted pretax profit of GBP21 million for the year to end-March. January and February were in line with its expectations, Majestic said, but March was weaker and compounded by foreign exchange movements.
Gormley will join Majestic and take up the role of chief executive officer with immediate effect, succeeding Majestic's acting interim chief executive officer Nigel Alldritt. Alldritt will resume his role as chief financial officer of the enlarged business.
Majestic said that it and Naked Wines will continue to operate as independent brands, with their own existing dedicated local management teams.
Naked Wines posted an earnings before interest, tax, depreciation and amortisation loss of GBP3.3 million on revenue of GBP74 million in 2014. The business is expected to break even in its current year to end-March 2016, with strong growth expected to continue thereafter, Majestic said.
"This acquisition will significantly accelerate the planned development of Majestic's online capabilities whilst providing Naked Wines with a nationwide store network to allow a Click & Collect delivery option for its customers. In addition, this acquisition opens up attractive international markets, increasing our potential customer reach eightfold," said Majestic Chairman Phil Wrigley in a statement.
"This is great news for the customers, staff and suppliers of both businesses and will ultimately create significant shareholder value," Gormley said in a statement.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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