The Board of Findel has announced that it has completed the sale of its subsidiary Kitbag to Fanatics UK Holdings Ltd, a newly formed subsidiary of Fanatics Inc, the US market leader for officially licensed sports merchandise.
The gross consideration payable at completion is £11.55 million in cash subject to an adjustment based upon the working capital position of Kitbag at completion. The cash proceeds will be used to further reduce the Group’s bank debt and to help drive further growth within the Group’s core businesses, Express Gifts and Findel Education.
Kitbag is a specialist sports retailer which operates through its own online platform Kitbag.com, and also manages officially-licensed club or sports organisation retail outlets, including online, physical stores and event-retail on a white-label basis. Its partners are a wide range of the leading names in sport.
The Board believes the sale of Kitbag to Fanatics to be in the best interests of our shareholders, Kitbag’s employees and Kitbag’s business partners. The excellent strategic fit between Fanatics and Kitbag together with Fanatic’s willingness to invest in the business will provide opportunities to Kitbag that were not available under Findel’s ownership. The sale is being made at a favourable time in Kitbag’s annual working capital cycle. In addition to the £11.55m purchase consideration, the need for Findel to fund both a peak working capital requirement of around £8m and its ongoing losses has been removed.
As a result of the reduced scale of the group following this disposal, the board of Findel PLC have decided that appointment of a Chief Executive is no longer appropriate and that the company should continue to be led by an Executive Chairman in the medium term. David Sugden who has filled this role since March 2015 pending the appointment of a Chief Executive has indicated that he does not wish to take on this commitment for an extended period and a search for a replacement will therefore commence immediately. David will continue in his current role to effect a smooth handover.
David Sugden, Executive Chairman of Findel, said: “We believe that this transaction represents a good outcome for all concerned. As Kitbag builds upon its strengthened position, it will benefit from the expertise and international presence in this marketplace that Fanatics offers. As for Findel, this deal will strengthen our balance sheet and significantly reduce our average working capital requirement, which is consistent with our ambition to focus our resources more fully on driving growth within our core home shopping and education businesses.”
Doug Mack, CEO of Fanatics, said: “We could not be more excited to work with the Kitbag team to build upon their multi-channel capabilities, expertise in soccer and strong portfolio of partners to accelerate both our U.S. and international growth. Fanatics and Kitbag are a nearly perfect complement, creating a complete platform for sports fans, leagues, teams and manufacturers globally, which will grow the licensed sports industry.”
For the year ended 27 March 2015, Kitbag reported a loss before tax and exceptional items of £1.2m (2014: loss of £4.1m). The loss before tax was £2.2m (2014: loss of £14.9m). This substantial reduction in losses was driven by a combination of top-line growth of 11.7% and the renegotiation of unprofitable contracts. The gross assets of Kitbag as at 27 March 2015 were £33.7m. The sale is expected to produce a marginal loss upon disposal for Findel.
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