The Spar Group has announced that it has entered into an agreement to subscribe for an 80% majority stake in the BWG Group.
The BWG Group is a leading food retail and wholesale distribution company with operations in Ireland and South West England, servicing more than 1,100 stores, including 100 company owned stores, with a total annual turnover of approximately €1.2 billion.
The BWG Group owns the Spar brand in Ireland with 421 Spar stores and an estimated 35% share of the Irish convenience store market.
The purchase consideration of €55 million, for the 80% stake in the BWG Group, has been funded by a rand-denominated loan and supports compelling long-term return expectations, underpinned by a well-established retail network and positive economic fundamentals in Ireland.
On a pro-forma basis, the transaction and acquisition of minority interests would have led to a 6.8% increase in Spar’s normalised headline earnings per share to 397.2 cents for the six months ended 31 March 2014, with a 30.2% increase in Spar’s consolidated revenue. The pro-forma net asset value per share increases by 10.4% after the transaction and acquisition of minority interests.
Benefits of the transaction for Spar include a more geographically diversified revenue stream, foreign currency diversification, enhanced scale and critical mass. Strong synergies exist between the businesses of Spar and the BWG Group, particularly in relation to their retail models, wholesale businesses and logistics. In addition, the transaction provides Spar with a well-positioned international retail platform
for future expansion.
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