Super Retail Group has acquired Australia’s largest sporting goods retailer-Rebel- from Archer Capital for a total consideration of AUS$610 million. Read the specifics of the acquisition below, including how this purchase plans to optimize all 90 of Rebel Sports existing stores.
The acquisition comprises 90 Rebel Sport stores, 36 Amart stores and 2 Performance Sports stores and accelerates the Group’s strategic objective of establishing itself as the leading retailer of automotive and leisure products in the Australian market.
Rebel currently operates 128 stores across Australia under the Rebel (90 stores), Amart (36 stores) and Performance Sport (2 stores) banners. Rebel was created through the combination of three iconic Australian sports stores chains, Amart All Sports (acquired in 2004), Rowe & Jarman (acquired in 2005) and Rebel Sport (acquired in 2007). In 2011 Financial Year, Rebel delivered $603 million in revenue and $77 million in EBITDA.
Super Retail Group Limited comprises four businesses: Supercheap Auto, BCF (Boating Camping and Fishing), Goldcross Cycles and Ray’s Outdoors, which carries outdoor recreation gear. Started in 1972 by Reg and Hazel Rowe, Super Retail Group has grown to become one of Australia and New Zealand’s largest retailers with around 400 stores across Australia and New Zealand and annualized sales in excess of AUS$1 billion.
The acquisition is expected to deliver mid single digit EPS accretion in FY12 (pre-synergies) and is currently expected to complete on 31 October 2011.
“The acquisition represents a fantastic opportunity for the Group to leverage its retail and supply expertise in a highly complementary business and to build Rebel’s position as the national leader in sporting goods retailing,” said Peter Birtles, CEO of the Group.
There is a natural strategic fit between the Super Retail and Rebel businesses. Rebel will strengthen the Group’s existing leisure and apparel retail offering, while the Group can provide the required expertise to accelerate Rebel’s growth and store roll-out profile and to optimize Rebel’s existing operations.
There is a significant potential opportunity to grow Rebel from 128 stores today to a total of 185 stores over the medium term, across both the Rebel and Amart banners.
In addition, the Group anticipates synergistic benefits will be realized through optimization of the procurement, logistics, supply chain, marketing, IT and administrative functions.
“Both Super Retail and Rebel are focused on providing customers with a comprehensive product offering and excellent customer service, delivered by passionate team members.” Mr Peter Birtles said.
The acquisition has the capacity to create significant shareholder value through the delivery of pre-tax synergies that are estimated by Super Retail management to be in the order of $10 million on an annualized basis, of which approximately 50% are anticipated to be achieved in FY12.
Super Retail expects the acquisition to meet its return on capital hurdle of 20% within five years.
The acquisition is expected to deliver mid single digit EPS accretion in FY12
The Group intends to maintain Rebel as a separate division known as Sports Retailing based in Sydney. Over time, and after a thorough integration planning process, the Group will seek to derive supply chain efficiencies through leveraging the expertise and capabilities of the combined businesses.
Super Retail Group’s largest shareholder, SCA FT Pty Limited (ACN 010 721 614)(2) (“SCA FT”) holding 40.98% of Super Retail Group’s shares prior to the Entitlement Offer, will participate in the Institutional Entitlement Offer and has committed to take up 11.0% of its entitlements and renounce the balance. New Shares in respect of those renounced entitlements will be sold as part of the institutional shortfall bookbuild.
Greenhill Caliburn and its legal adviser is Mallesons Stephen Jacques. Macquarie Capital (Australia) Limited and RBS Equity Capital Markets (Australia) Limited are joint lead managers and underwriters to the Entitlement Offer (the “Underwriters”).
For the origination of this report, visit the article.