Dis-Chem adds Baby City to its basket


Dis-Chem adds Baby City to its basket

Published Date: 2020-05-18 | Source: Stephen Gunnion | Author: Stephen Gunnion

Dis-Chem adds Baby City to its basket

The discount pharmacy chain says Baby City has been in its sights for many years and there are clear opportunities to harness synergies.

Dis-Chem has bought Baby City for R430 million as it grows its presence in the baby sector to take advantage of the roughly 900,000 births a year in South Africa.

The discount pharmacy group is buying the network of 33 specialist stores for baby products from the Aronoff family. Michel Aronoff will continue as MD of Baby City, which generated revenue of R855 million in the year to end-February, and current staff will stay on too. Dis-Chem said the transaction contained both a shareholder loan and net working capital guarantee to ensure the retailer's position upon closure of the deal resembled the pre-Covid-19 level, with incremental earnings accruing to Dis-Chem. the deal needs approval from the competition authorities

Dis-Chem said there were clear opportunities to harness synergies across both brands. The Baby City retail stores would be integrated into Dis-Chem's current supply chain and serviced by CJ Distribution, with the additional volumes improving the distributor's margins. It plans to expand its Dis-Chem branded clinics to Baby City to offer ante and post-natal clinic services aimed at babies and toddlers, attracting more customers. It will also extend the Dis-Chem loyalty programme to Baby City customers and introduce some of its own brands to its stores. It has identified the potential for around another 30 sites for well-traded Baby City outlets.

Dis-chem's shares rose 1.5% to R19.66 on Friday.

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