Shoosmiths has advised Truworths International on the acquisition of an 88.9 per cent stake in fashion footwear chain Office Retail Group.
The deal value is R5.5bn (£256m) and marks the South African fashion retailing group’s entry in to the UK retail market.
The deal completed on 4 December. The business has been acquired from investment funds advised by European private equity group, Silverfleet Capital, and the management of Office. Management have reinvested a portion of their proceeds from the sale to retain an 11.1% shareholding in the business. Truworths has the option to buy the shares owned by management in a three to five year period after the acquisition.
Truworths CEO, Michael Mark, said the acquisition provides Truworths with access to the UK and continental European retail markets and the opportunity to diversify the group’s customer base and earnings.
Office is the leading young fashion footwear retailer in the UK and Ireland, trading under the Office brand and specialist brands Poste (men’s footwear), Poste Mistress (ladies footwear) and Offspring (sports footwear). Office has 109 stores in the UK and the Republic of Ireland and 47 concessions in high profile retailers Selfridges, Topshop and House of Fraser. The business started its expansion into continental Europe in 2014 and currently has six stores in Germany. Office also operates a successful e-commerce business which now accounts for approximately 20% of sales. In the year to January 2015, Office generated sales of £270.2m (R [5.8] billion).
Following the acquisition, approximately 35% of the group’s revenue will be generated outside of South Africa, and approximately 54% will be generated from cash sales.
The transaction will be funded through R3.6 billion in cash and £100m of debt funding to refinance existing Office debt and provide working capital facilities. The acquisition will be effected through a Truworths’ subsidiary that is resident and managed in the UK.
Shoosmiths was recommended to Truworths by leading South African law firm ENSafrica through global professional business network, the World Services Group (WSG). ENSafrica has been advising Truworths in Southern Africa for many years.
Teams from across Shoosmiths’ range of commercial practice groups – including corporate teams in Manchester, Birmingham and Milton Keynes – advised Truworths on the transaction. Corporate senior associate Sarah Thawley and associate Claire Checketts worked on the acquisition and management equity arrangements, respectively.
