Takeover creates South Island-wide chain
By Dana Johannsen
Century-old Invercargill-based department store chain H & J Smith has continued its South Island expansion by buying retailer Arthur Barnett's Dunedin and Christchurch operations.
H&J Smith will later this year acquire the department store assets of Arthur Barnett and then form a new company to create a South Island-wide department store group.
Group managing director Acton Smith would not reveal the multi million-dollar price of the transaction. But the new company expects to generate an initial annual turnover of $70 million.
Once established, it will be New Zealand's largest independent department store group and employ more than 600 people, Mr Smith said.
With both companies more than 100 years old, the merging of the two department store businesses will bring together two of the South Island's best known retail brands.
The Arthur Barnett brand will be kept for the "foreseeable future" and its directors and shareholders Julian Smith and Trevor Scott will be on the board of the new company.
Mr Smith said the acquisition was logical and would give H&J Smith a presence in the South Island's two biggest cities.
H&J Smith is well-established in Invercargill, Gore, Nelson, Te Anau and Queenstown and has recently expanded into Balclutha and Blenheim.
John Green, chief operating officer of H&J Smith, has been appointed chief executive designate of the new department store group and will concentrate solely on the further development of the new group.
While there were similarities between H&J Smith and Arthur Barnett, Mr Green said the businesses were in "two different situations" and it was expected to take at least two years to fully integrate them.
Mr Green said he was confident department stores had a real place in the future retail landscape.
Arthur Barnett, formerly a listed company, went private last year after a $9.5 million takeover by Messrs Scott and Smith.
The company has ruled out plans to relist on the Stock Exchange.
Although the move would create a company with a critical mass of a size that will be capable of both natural growth and further development, Mr Green said there are no specific plans for expansion.
However, major refurbishment is under way in the Invercargill store and a new outlet is being planned for Queenstown.
The formal date for the merger will be November 1 but the two managements will work together from July 1 to ensure a smooth transition.
Richard Ballantyne, managing director of upmarket Christchurch department store Ballantynes, said the merger was a positive move for H&J Smith.
"We feel it's very good that they are a longstanding business with the longevity and reputation needed to do well," he said.
Although in some respects the two stores have similar lines of merchandise, Mr Ballantyne said he was not concerned about the increase in competition.
Comments from our readers
No comments yet
Add your comment:
MARKET CLOSE: NZ shares rise, led by A2 after $40 mln placement; Contact, Meridian, MRP gain
NZ dollar heads for 3.7% gain vs. greenback as traders reassess Fed rate hike bets
Further land sale restrictions possible under TPP, Labour 'very interested'
Sharechat Hot Stock: Orora
NZ govt to look at monopoly power rules next month; cartel criminalisation still on the agenda
Former SPGI director Mark Turnock pleads guilty to charge of false financial statements
NZ spending on debit, credit cards increases in September
Silver Fern could stay NZ-owned for as little as $25k per farmer, says Chinese deal opponent
AFT Pharmaceuticals confirms dual-listing plans to fund R&D, global growth
A2 Milk raises $40 mln at 5.5% discount in oversubscribed share placement