The Foschini Group tailors a deal for JET

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The Foschini Group tailors a deal for JET

Published Date: 2020-07-14 | Source: Stephen Gunnion | Author: Stephen Gunnion

The Foschini Group tailors a deal for JET

The retailer says it has a unique opportunity to buy selected parts of the business, giving it significant scale at an attractive price.

The Foschini Group (TFG) plans to buy JET from Edcon in a move that will strengthen its position in the value segment of the clothing market. The retail group has submitted a conditional offer to Edcon's business rescue practitioners (BRPs) to buy 371 commercially viable stores and selected assets of JET for R450 million. That includes at least R800 million in stock. It's been granted exclusivity to negotiate and finalise the terms of the deal.

Edcon was placed into business rescue two and a half months ago as the national lockdown scuppered a turnaround plan, leaving it unable to pay suppliers or fund its operations. Earlier this month, Edcon's BRPs signed a heads of agreement to sell parts of Edgars to Durban-based group Retainability, which also owns the Legit, Beaver Canoe and Style retail chains.

TFG said its proposed deal would enable it to acquire selected parts of the JET business, a unique opportunity which previously was not possible. It said it would give it significant scale at an attractive price and would include the transfer of selected key executives and staff of JET.

Last month, the group said it planned to ask shareholders to approve a R3.95 billion rights offer to help it to reduce debt in light of the uncertainty surrounding the Covid-19 pandemic. At the time, it said funds from the equity raise may also be used to grow its business organically and take advantage of any market opportunities that crop up.

In a trading update yesterday, it said turnover fell 43% for the three months to 27 June due to the trading disruptions caused by lockdowns in SA, the UK and Australia. Turnover at TFG Africa declined 38.4% and remained subdued last month after its stores reopened. Turnover at TFG London was down 68.5% for the period, while it fell 42.4% at TFG Australia.

TFG said it was adapting its business as much as possible to deal with the dynamic environment as the pandemic continued to evolve at different stages through its various geographies.

The group's shares rose 9.1% to R67.83 yesterday.

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