ASX-listed shoe retailer RCG Corporation (RCG) has confirmed it will pay around $200 million to buy New Zealand’s Accent Group, the owner of the retail chain Platypus Shoes and the distributor and retailer of big name brands including Vans, Sketchers and Dr Martens.
The deal will in fact see the Accent group end up with a large stake in RCG via a placement of $100 million of shares at 70c. RCG shares ended at 72c on Wednesday night and trading was suspended yesterday to allow the placement and other fund raising moves to occur.
RCG said the placement to Accent of 138.8 million shares will see them placed in escrow for two years (meaning they can’t be sold). The placement means that no one will own more than 17% of the RCG expanded share base.
The major shareholders of Accent – led by founders executive chairman Michael Hapgood, chief executive Daniel Agostinelli and director Craig Thompson – will receive the $100 million worth of RCG shares. The trio will also join the RCG board.
RCG 1Y – Accent deal doubles RCG footprint
RCG is best known as the owner of The Athlete’s Foot Australia chain of sports shoes stores. It will pay between $180 million and $200 million for Accent.
The deal will take RCG’s total store footprint from 174 stores to 269 stores and boost total group sales from $268 million to $450 million.
Profit is expected to double from $12.3 million to $26.3 million when Accent and RCG are merged, according to documentation from RCG yesterday.
"Accent is a significant and growing business. It will dramatically increase the scale and financial outcomes of RCG, standing the business in even better stead to face the challenges ahead," RCG chief Hilton Brett said in a statement.
RCG will fund the deal through a $25 million, fully underwritten placement to sophisticated investors at 70c a share, a $100 million placement to Accent shareholders at 70c a share, a $25 million unsecured vendor note and up to $50 million of bank debt with the NAB the sole funder.
Accent (AGL) is an importer, wholesaler and retailer of international footwear brands and related accessories.
For the 12 months to the end of December 2014, AGL generated over $62 million of external wholesale sales through its exclusive distribution of the Vans, Skechers, Dr Martens, Timberland, Stance, K Swiss, Stance and Palladium brands primarily in Australia and New Zealand.
The business also operates 97 stores, including mono‐branded Skechers, Vans and Timberland stores as well as the market‐leading multi‐branded sneaker business Platypus Shoes. Its retail sales for the 12 months ended December 2014 were approximately $120 million.
RCG said that following completion of the transaction, RCG shareholders will be given the opportunity to subscribe for shares at no more than 70c under a share purchase plan.
"Under the terms of the share purchase plan, shareholders registered at 7:00pm (Sydney time) on March 18 will be entitled to subscribe for up to $15,000 of RCG shares to raise up to a maximum of $10 million (subject to RCG’s discretion to accept oversubscriptions and scale back applications). Further details of the share purchase plan will be provided to shareholders in due course,” RCG said yesterday.
