Studio Retail Group plc, the online value retail business, has agreed the sale of Findel Education Limited in a management buyout deal valued at £30m in cash. The Hyde-based business which was no longer considered to be a good fit with the Studio core business has sold to West Moorland 221 Limited, a newly-formed company owned by investment funds managed by Endless. In addition to the acquisition price, the group has made allocated a working capital facility of £2m to Findel Education.
The net cash proceeds will be used to make a voluntary payment to Studio Retail Group’s defined benefit pension fund of £9m, with the remainder used to reduce group net debt, with the disposal enabling Studio to simplify its operations and focus management on the fast-growing Studio business.
Findel will be controlled by a management team comprising managing director Chris Mahady, deputy managing director and chief financial officer Mark Whittaker, and chief techology officer, Martin Jones.
Chris Mahady said: “We are pleased to have secured the investment from Endless and strongly believe that, together, we can develop the company at pace, through investing in our brands and capabilities in the wider schools and nurseries marketplace. We would also like to thank Studio Retail Group for the support they have given Findel Education during their ownership.”
Andrew Ross, partner at Endless, said: “We are delighted to be backing Chris, Mark, Martin and the entire Findel Education team to deliver our exciting shared vision for the business and look forward to working closely with them in the coming years. “We would also like to thank Studio Retail Group for the support they have given Findel Education during their ownership.”
A previously proposed £50m sale of Findel to Wakefield-based YPO collapsed in November 2020 following objections from the Competition and Markets Authority.
Studio Retail Group also said the sale concludes its strategic review, including the possible sale of the entire group, which was announced last December. It commented that despite having engaged extensively with a number of parties, discussions did not progress beyond receiving qualified, indicative and non-binding expressions of interest for the company. It had however received multiple offers for its educational resources business, resulting in today’s deal.
In a separate trading update today, Studio Retail Group said its traditionally quieter final quarter was “exceptionally strong”. Fourth-quarter product sales were 88 per cent ahead of the prior year, with gross margin rates from product sales in the period 650 per cent higher. This performance contributed to product sales growth of 43 per cent for the full year, with gross margin rates up 290 per cent year-on-year, a record breaking performance.
Over the period, government support in relation to the COVID-19 pandemic was either repaid or not claimed and had no impact on profitability.
The business said it has seen a step-change in its active customer base this year. Total customer numbers are up 36 per cent to 2.5 million, with 15 per cent more credit account customers, and sales from its Studio App h grown strongly in the fourth quarter.
This business says that its adjusted profit before tax from continuing operations for FY 2021 is expected to be in the region of £48-50m, up 75 per cent – 83 per cent on £27.3m in 2020.
Paul Kendrick, CEO, said: “Studio has seen strong trading during the financial year ending 26 March 2021 whilst successfully managing the operational challenges of the pandemic, which, along with the sale of Findel Education, creates a step change in our financial position. We start the new financial year from a position of focus and strength, with the growth in our customer base demonstrating the success of our leading online value retail and integrated financial services offer.”
Share