Clothing and homeware retailer Mr Price has announced that it has acquired a 70 percent stake in the company that owns clothing retail group Studio 88.
“Mr Price is pleased to announce that on 12 April 2022, it entered into transaction agreements to acquire 70 percent of Blue Falcon Trading 18 (Pty) Limited, which owns the Studio 88 group of businesses, from RMB Ventures Six (Pty) Limited and current management of the Studio 88 Group,” it announced in a statement on Wednesday (13 April).
Fully funded acquisition
The acquisition is worth R3.3 billion and will be fully funded through Mr Price’s existing cash reserves. It represents around six percent of the group’s market capitalisation.
According to Mr Price, the Studio 88 Group is the “the largest independent retailer of branded leisure, lifestyle and sporting apparel and footwear in South Africa, generating revenue of R5.6 billion for the financial year ended 30 September 2021.”
It owns and operates clothing, footwear and accessories retail outlets such as Studio 88, SideStep, Skipper Bar and John Craig. It has more than 700 stores, which sell merchandise ranging from international brands to private labels.
The acquisition will increase Mr Price’s annual revenue to around R28 billion and will become the second largest of its nine trading divisions. Its store footprint and number of employees will also rise to 2,400 and 25,000, respectively.
Entry into prized market segment
“The partnership with Studio 88 Group gives Mr Price an ideal entry into the high growth urban wear and athleisure segments of the market, which present us with a significant non-competing channel,” Mr Price CEO Mark Blair said.
“What attracts us to the Studio 88 Group is their deep understanding of trend conscious South African consumers and their ability to address their needs via their various trading formats. We also share a similar DNA, both being founder-led businesses intent on offering customers superior value and have high performance cultures.”
Studio 88 Group’s founder, Lauren Wernars, will continue running the business. “We are delighted to be partnering with an iconic South African retailer who has the vision and retail expertise that will be key to realising our considerable trading opportunities,” he said.
“I am very confident that there is strong cultural alignment with our new strategic partner and with our combined skills, we can accelerate our growth and contribute meaningfully to Mr Price achieving their vision.”
Seven senior management team members who are also shareholders will similarly remain in their positions, the group said.
The acquisition is subject to the fulfilment of regulatory and commercial conditions by 31 October 2022, including approval by the Competition Commission of South Africa.