Latest deals span spectrum of the sector


Although the current economic outlook appears to be gloomy, the
latest acquisitions in the sector show there are still deals to
be made-across a variety of merchandise categories.

On 21st February, Flying Brands announced it was selling its
gifts division and exiting the cut-flowers market. The buyer is
Interflora, which has agreed to pay £2.4 million for the
business and assets of Flying Flowers and Flowers Direct. Just
two years ago, Flying Brands paid £2.95 million for Flowers
Direct.

The proposed sale is just one deal in a recent flurry of M&A
activity in the sector. Earlier in February, Donald Russell, the
mail order butcher renowned for its gourmet food, sold a majority
stake to Vestey Foods. Vestey, the former owner of Dewhurst, is
believed to have fought off major supermarkets in what’s been
described as a “competitive auction” for the meats
purveyor. Donald Russell had appointed advisers from Cavendish
Corporate Finance in April last year to investigate interest from
companies looking to expand into the online retail market.

There will be no changes to the day-to-day running of the Donald
Russell business, which will continue to operate out of Inverurie
in Aberdeenshire under the same management team. Thanks to the
acquisition and following the completion of a £6 million
investment programme into a new distribution and fulfilment
centre, Donald Russell now plans to take advantage of expansion
opportunities in the UK and internationally.

Also securing investment in February was private-sales website
SecretSales.com. The five-year-old business received an
investment of £6.3 million from a syndicate of investors.
Following the deal, cofounders Michael and Silvia Cody have
stepped down from their active roles within the company but
remain shareholders. Chief executive Nish Kukadia and buying
director Sach Kukadia are joined on the board by fellow
shareholder Sergio Dias, formerly chief executive of
Germany-based Brands4friends.de, as executive chairman.

The funding, says Nish Kukadia, will help SecretSales expand in
the UK in all areas of the business, with particular emphasis on
sourcing, marketing and technology.
Technology is a focus for Ideal Shopping Direct (ISD) too.
Marking its first acquisition since it was taken private by
Inflexion last year, ISD has bought Createtoday from Internet
Media Marketing for an undisclosed sum.

Createtoday.com is an ecommerce platform for buyers and sellers
of creative content, offering consumers the opportunity to
produce customised greetings cards and wall art.

This investment in digital development will help ISD
“leapfrog” the competition, says Mike Hancox, chief
executive of Ideal Shopping Direct. It will use the Createtoday
platform to enhance its Create and Craft business, which is
enjoying strong growth across all channels including social
media, he adds.

Rowland’s rescued ?from administrationThe grey market was the
target for the next deal. A victim of the economic slowdown and
laden with bank debts, Rowland’s Clothing confirmed it had been
acquired out of prepack administration by a consortium including
New World Private Equity and new chairman Stewart Cantley on 9th
February. Cantley joins Rowland’s established management team,
which includes David Selby as managing director and Jeremy Jarvis
as financial director.

Rowland’s Clothing, which was founded more than 25 years ago,
targets women aged 55 and older with a range of clothing and
accessories. It has retail outlets in Bath, Bradford on Avon,
Chichester, Farnham, Lymington, Marlborough and Salisbury, as
well as a catalogue and online business based in Trowbridge,
Wiltshire.

Having initially approached Rowland’s with a view to buy it six
months ago, Cantley ended up in a turnaround role and began
putting together a plan for the business. When it became clear
that Rowland’s couldn’t manage its bank debts, Cantley and New
World agreed a prepacked deal with administrators at KPMG. But
unlike other prepacked buyouts that see the new business walk
away from all debt, Cantley stressed that the new business would
honour Rowland’s trading debts and says that he believes more
than 90 percent of Rowland’s suppliers will stay with the
business. The acquisition also saves 72 jobs, though eight
redundancies were made, primarily in back-office and admin
roles.

Among the top priorities for Cantley are Rowland’s stores. He
sees retail as an integral part of to the business but admits the
shops need “reinvigorating”. All the stores are
currently trading, with a decision on whether all will remain
open expected within six months.

Planning a turnaround
Cantley has high hopes for Rowland’s with plans for a major
relaunch in 2013 “well underway”. As he was involved
with the business prior to its administration, Cantley has
already put in place preparations for a much-needed revamp. This
will include everything from refreshing product lines and adding
new ranges, right through to service improvements and new
branding. He estimates the business will reach turnover of
£25 to £30 million by the end of 2014-a figure never
before reached in the company’s history. But Rowland’s, as a
multichannel business, has huge growth potential, “We need
to energise the business, get the basics right and emphasise our
points of difference,” states Cantley.

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