Tag: sale

Staples finally sells up

Staples’ future under private equity ownership is all about online growth.

Having disposed of its international operations (including those in Australia and New Zealand) Staples has sold off the rest of ‘farm’ to a private equity group.

Sycamore Partners, a US private equity firm that specialises in retail, will pay US$6.9 billion for Staples, a company that has seen its sales, profits and store numbers decline in the wake of the online shopping phenomena, driven by the likes of Amazon.

Staples had sought to remain competitive in the online world by merging with Office Depot but the deal was blocked by US regulators last year and the companies abandoned the plan.

In its latest annual report, Staples was up front about the challenges it faced, stating it faced strong competition from wholesalers and local stationery stores.

“We also compete with online retailers such as Amazon.com, mass merchants such as Walmart and Target, warehouse clubs such as Costco, computer and electronics retail stores such as Best Buy,” the company said.

According to a report in the New York Times, Staples’s board and management decided to sell the company after shareholders had essentially lost faith in the business. Shares of the company were trading near US$7 earlier this year, having fallen sharply from about US$18 a share just two and a half years ago.

Sycamore’s offer of US$10.25 a share represents a 20% premium over the company’s stock price in early April, before initial reports of a deal to sell the company lifted shares.

Staples still sells huge volumes of paper, printer cartridges with a minority of its goods sold at bricks-and-mortar locations.

Around US$10.6 billion of its sales are delivered, compared with about US$6.6 billion sold in stores.

Source: Stationery News

Office Depot sells off Korean business

Office Depot has closed on the sale of its business in South Korea to private equity firm Excelsior Capital Asia.

Office Depot had previously disclosed its intention to sell the majority of its international businesses under a process that began in 2016.

“This transaction follows on the recently announced agreement to sell our businesses located in Australia and New Zealand,” Gerry Smith, CEO of Office Depot. “We are now one step closer to achieving our goal of divesting substantially all of our international businesses in order to focus on the growth opportunities available in the North American market.”

Excelsior Capital Asia is described as a Hong Kong and South Korea-based direct investment firm.

Source: www.stationerynews.com.au

Foreigner investors ditch local stock

Foreign investors have sold nearly R100-billion worth of South African equities in 2016 on a net basis, even as the country’s bond market attracted R62-billion from foreigners in the same period, according to JSE data.

While the SABMiller/Anheuser-Busch InBev (AB InBev) transaction accounted for the majority of outflows, SA’s economy had come under scrutiny as an emerging market investment destination, says Donna Nemer, head of capital markets at the JSE.

SA’s financial markets were also subject to external factors, including overall risk appetite for emerging markets, Nemer says.

“You just have to read the press to see that SA is not an attractive investment destination at the moment,” says Kokkie Kooyman, portfolio manager at Denker Capital.

“I think it’s simply that plus the fact that most index stocks in SA are fairly expensive,” he says.

Foreigners have been net sellers of local equities to the tune of R98,99-billion in 2016. SABMiller and AB InBev accounted for R43-billion and R21-billion of these sales, respectively.

The increase in the local share register of AB InBev was not enough to offset the outflow as a result of the delisting of SABMiller, Nemer says.

You just have to read the press to see that SA is not an attractive investment destination at the moment,
Kokkie Kooyman, portfolio manager at Denker Capital
“Overseas buyers can buy any other brewer, including AB InBev, on their own stock market. They don’t need to come here to buy it,” says Wayne McCurrie, portfolio manager at Ashburton Investments.

McCurrie says AB InBev was expensive, considering the short-term headwinds facing SABMiller in emerging markets. It had also sold some of its best brands to appease competition authorities, which had diminished its growth prospects.

Mining, media, mobile telecoms and banking were, respectively, the next largest contributors to equity market outflows on a sector basis, with Naspers posting net foreign sales of R12,9-billion, followed by British American Tobacco at R11,9-billion.

The country’s bond market, meanwhile, had attracted R62.2bn from foreign investors in 2016, compared with R13bn over the same period in 2015. With developed market bonds yielding low or even negative returns, investors have sought yield in emerging market debt.

Considering the large difference between developed market bond yields and South African bond yields, known as the carry, the rand would have to weaken greatly for foreign investors to be out of money, McCurrie says.

By Hanna Ziady for www.businesslive.co.za

Office Depot has followed through on its plan to offload its European operations with the announcement of a purchase agreement with private equity firm The Aurelius Group.

Office Depot, which owns the OfficeMax business in Australia and globally, had previously disclosed its intention to explore strategic alternatives regarding its European business, under a process that began earlier this year.

“The sale of our European business will allow us to streamline operations and focus our resources on markets that will provide the best opportunity to implement our recently announced three-year strategic plan,” Roland Smith, out-going chairman and CEO for Office Depot, says

Since 2005 Aurelius has completed more than 70 transactions across Europe and specialises in investing in companies and corporate spin-offs, as well as complex divisional carve-outs from corporates.

The transaction is structured as an equity sale, for nominal consideration, with the buyer acquiring the European business with its assets and liabilities.

Annual revenue for the European business is approximately $2,3-billion.

The transaction, which has been approved by Office Depot’s board, is subject to regulatory approval from the European Commission and consultation with the central works council, which represents employees in France. The transaction is expected to close by the end of 2016.

Source: www.stationerynews.com.au

As speculation gains traction that Walmart is selling off its anchor shareholding in its African partner Massmart, industry pundits are concerned that finding an investor with enough funds to take over may prove difficult.

At Walmart’s AGM in Fayetteville, Arkansas, this week, shareholders in the world’s largest retailer may stew over the health of the US economy, the technology threats posed by online giants such as Amazon, and its African investment. – which, after five years, is struggling to maintain momentum.

When Walmart bought a majority shareholding in Massmart, the owner of Makro and Game was trading at R148, costing the US retailer $2.5-billion.

Now the stock is trading about 23% lower since the deal was approved by anti-trust authorities in March 2012.

In January this year, the share was trading as low as R83.20 – a 48% decline in value since the takeover.

The group had to scale back on its growth strategy having opened 11 new stores in Africa from the 27 they had in 2012.

Earlier this year, Barclays plc announced it will sell off its stake in its African business, showing the waning investment sentiment for the continent.

Meanwhile, Walmart’s share price has increased more than 17% despite lukewarm growth in its home market.

Massmart’s performance in Africa has been further dampened by the struggling South African economy.

Sébastien Delsemme, a consultant analyst for Kantar Retail, says: “We have heard from various sources Walmart have identified Africa as part of the divestment in their current portfolio – among others.
“The problem [will be] finding an investor with enough funds to take over.”

Delsemme described the sell-off speculation as “just rumours”. However, the speculation has foundation in precedent.

In 1999, Walmart bought into South Korea, to exit seven years later. Similarly, it pulled out of Germany after eight years.

Poonam Goyal, senior retail analyst at Bloomberg Intelligence, says Walmart had also been struggling in the UK because “they don’t have the price perception of being low-priced – some of the other retailers have taken that perception away from them”.

She adds: “It’s not certain that Walmart will even chase the demand because it’s an unprofitable way to chase it.
“So while they like to be lower-priced, they don’t like to be giving up their margin entirely, which is what some of the grocers are doing in the UK.”

Walmart’s overriding strategy is “to not just be a competitor, but to own the market. They want to be the main player.”

But in the local retail space, Walmart and its partner Massmart have not been able to steal market share from competitors such as Shoprite and Spar.

Although Massmart may not meet Walmart’s expectation in terms of returns, “Walmart does tend to be long-term oriented with its retail investments”, says Chuck Cerankosky, MD of Ohio-based Northcoast R esearch.

“It spent a lot of time repositioning Asda years ago and it might be going through a bit of that again in the UK. So maybe there is work to be done at Massmart and they just haven’t made it a top priority because there obviously has been a lot of effort made to improve the performance here in the US.”

According to Walmart’s 2016 annual report, the company has 6 299 stores operating outside the US, including 346 in Japan. It has 408 stores in 13 African countries.

However, Joseph Feldman, a senior MD at Telsey Advisory Group in New York, says that although he hadn’t heard anything specific from Walmart about a possible sell-off, “Walmart is more of a harvest story as opposed to a growth story”.
He adds: “It’s not a growth story the way a 10-store retailer has potential to go to 500 stores. Obviously Walmart is a mature business that has been able to generate positive traffic.
“Walmart wants to stay the course and emerging markets makes sense given the nature of what they sell and how they sell it. They are trying to help people live better and save money with people living better.”
But entering a market through a partnership “almost makes it easier to exit”, Goyal points out.

“It’s really about the return – whether they can get the returns on investment that they expected from that market, and whether the partnership is working well for them and there’s room for them to at some point move up the chain and become number one.”

Walmart was not available for comment at the time of publication.

By Palesa Vuyolwethu Tshandu
This article was first published in Sunday Times: Business on 05/06/2016

Pelikan could be up for sale

Pelikan AG, the German-listed unit of stationery manufacturer Pelikan International Corp Bhd (PICB), has appointed investment bank BNP Paribas to look at “strategic options” for the company, according to the Malaysian Star.

The Star reports that Pelikan AG has made a filing with the Frankfurt Stock Exchange with a “a teaser document issued by BNP Paribas to potential bidders for Pelikan AG.”

According to sources, the entire company could be sold “at the right price”. PICB currently owns 98,66% of Pelikan AG.

Source: www.office-times.com

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