Warehouse pays more for Aussie acquisition
By Ben Dutton
New Zealand's largest listed retailer, The Warehouse, today announced the final settlement of its purchase of Australian discount stores Clint's Crazy Bargains and Silly Solly's.
The total cost of the purchase is now A$118 million, as opposed to the previously announced estimate of A$105m.
The Warehouse ended up paying more than expected for the acquisition because the pro forma EBIT for Clint's was A$2.8m above forecast. The higher EBIT was a result of the pre-GST retail rush that Australia experienced and better cost controls by the company.
However, there is a reduction in the potential "earn-out" if the Australian retail operation meets earnings targets by the year 2003. The earn-out was previously estimated as A$24m, but The Warehouse now says that this may be reduced to A$11m.
Over 8.5 million shares have been issued to help pay for the purchase at an average issue price of A$3.60 per share. Investors will be pleased to know that there is a two year restraint on trading the shares. More shares will be issued for the vendors of Solly's and other Australian staff later this year.
It was also announced that The Warehouse's share buyback will commence in early November and will take place over a twelve month time frame. It is anticipated that this buyback will counter-balance the new shares being issued.
"Tindall interests" and the Australian vendors will not be participating in the buyback.
Warehouse shares were down slightly during the day, trading at around the $6.25 mark.
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