Conviviality Retail Plc Acquires GT News Limited for £6 million
Conviviality Retail Plc (AIM: CVR), one of the UK's largest franchised off-licence and convenience store brands trading primarily under the Bargain Booze fascia, is pleased to announce that on 4 February 2015 it entered into an agreement to acquire the entire issued share capital of GT News (Holdings) Limited ("GTN") for a net cash consideration of £6 million with a working capital adjustment estimated at approximately £0.3 million. GTN is a leading independent convenience retailer with 37 stores largely in the East Midlands and Yorkshire.
The Board believes that the purchase of GTN complements the recent acquisition of Rhythm and Booze, improving store density in the East Midlands and Yorkshire to drive logistics and marketing efficiencies. These stores provide an excellent fit with the existing Conviviality portfolio and that profitability will be enhanced with Conviviality's greater buying power, marketing expertise, logistics capabilities and consolidation of back office functions. Conviviality will rebrand the majority of the stores under its Bargain Booze or Bargain Booze Select Convenience fascias.
For the year ended 30 June 2014, GTN generated revenues of £57 million1, EBITDA of £0.9 million and profit after tax of £0.4 million. As at 30 June 2014 GTN had net assets of £2 million, of which £1.8 million related to freehold property which was disposed of on completion as described below. The acquisition will be earnings enhancing for the financial year ending 30 April 2016.
Terms of the Acquisition
The total consideration for the acquisition of GTN is £7.6 million with a working capital adjustment estimated at approximately £0.3 million and is being settled in cash. Immediately on acquisition freehold property held within GTN will be sold back to the Vendors for £1.6 million in cash. Therefore the net consideration is £6 million before the working capital adjustment.
Diana Hunter, Chief Executive Officer, Conviviality Retail Plc, commented:
The acquisition of 37 stores from GT News is in line with our stated aim to grow our business into areas which are underserved by our brands. Yorkshire and the East Midlands are two such areas and will provide a significant growth opportunity. Customers will get even better value for money across all the brands and ranges that they currently buy as well as the additional benefit of a much stronger range of beers wines and spirits.