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Price has entered into an agreement to acquire the high-performance retailer, Power Fashion, which currently has 170 stores in South Africa.
Reuters analysts set the acquisition value at around R1.6 billion.
Power Fashion was founded in the 1950s and is a high-growth family-owned clothing retailer based in Durban, South Africa. It is value-focused and cash-based, serving low- to middle-income households.
It offers merchandise for the family, sells mainly clothing, but also offers cellular products, basic household items, valuable cosmetics, electricity and other opportunistic products.
“Mr Price and Power Fashion share a similar set of values that make this acquisition a perfect fit,” said Mr Price CEO Mark Blair
“Power Fashion was built with an entrepreneurial mindset similar to Price’s and also offers exceptional value to its customers. We both have high-performance cultures and are equally focused on strategic growth.
“Our sufficiently differentiated business models and our target customers will allow a solid positioning in both the deep value and fashion value market segments. We are pleased to offer immediate benefits to our shareholders, as well as continue to deliver on our respective promises to our customers. “
At Power Fashion, Blair said the group will acquire a business that meets each of these carefully researched criteria:
- Value-focused businesses that are predominantly traded in cash and aligned with the core capabilities of the group;
- It conforms to the group’s capital allocation strategy and is complementary in nature (the size of the transaction is approximately 4% of the market capitalization);
- High performing business with a strong track record, eliminating the need for any response strategy and avoiding the distraction of administration and associated integration costs;
- An existing business of attractive scale that is available at a reasonable valuation. Cumulative immediate gains and not dependent on synergies;
- Opportunity for significant future growth in presence and categories;
- Low risk instead of acquiring unfamiliar territory with additional currency risk;
- Strong management and trained team to avoid distractions and ensure continuity.
Read: Mr Price Highlights 7 Post-Closing Trends In South Africa
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