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Warehouse buys majority stake in online retailer Torpedo7 for up to $33M

Monday 4th March 2013

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Warehouse Group, which reports its first-half profit this week, will spend up to $33 million buying online retailer Torpedo7, just months after buying consumer electronics chain Noel Leeming Group.

The country's biggest listed retailer will pay $20 million upon settlement, and up to a further $13 million over the next three years if earn-out targets are met, for a 51 percent stake in Torpedo7, it said in a statement. The online retailer operates the Torpedo7, 1-day and Urban Daddy websites across Australia, and will continue to operate as a standalone business.

"The strategic partnership created by the purchase of a majority shareholding in Torpdeo7 Ltd is another example of our continued focus on the expansion of our multichannel business enabling us to offer customers a retail experience when, how and where they want it across a broader range of products," chairman Graham Evans said.

In December, Warehouse bought the unprofitable Noel Leeming chain for $65 million, saying it will add between $4 million to $6 million to earnings before interest and tax in the six months ended Jan. 27, 2013.

The Torpdeo7 purchase is expected to settle early next month. The remaining shares will stay with existing investors.

Warehouse is set to report first-half earnings on Friday, and Forsyth Barr analyst Andy Bowley expects a 13 percent gain in earnings, before interest, tax, depreciation and amortisation to $99.9 million on sales of $1.11 billion.

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