Right place, right time, Spar SA snaps up Ireland, SW England for a snip

The Spar Group announced today that it had entered into an agreement to subscribe for an 80% stake in the BWG Group. It has been noted that the price is cheap at €55m, and the deal of a lifetime for the Spar Group. BWG is a food retail and wholesale distribution company with operations in Ireland and South West England, exposing Spar to synergies that span logistics, infrastructure and retail models. Spar’s share price is up just over 5% on the back of the news, with the group announcing that the transaction and acquisition of minority interests would have led to a 6.8% increase in normalised headline earnings per share, and a 30.2% increase in Spar’s consolidated revenue. Alec Hogg spoke to Spar’s CEO, Graham O’Connor to get insights into the details of the deal. – LF

ALEC HOGG: Welcome back to Power Lunch. Joining us on the line from Durban is the Chief Executive of Spar, Graham O’Connor. Today Spar announced on the Stock Exchange News Service that it has made a major acquisition into Europe and indeed, into Southwest England and Ireland. It is nearly a R1bn deal. The share price is up, more than five percent. Graham we were talking earlier with Viv Govender who suggests, maybe something that is cheap might actually also be something high risk. It looks very cheap, given what you’ve acquired here, but a different geography.

GRAHAM O’CONNOR: Well, not really. We were very fortunate, Alec in terms of the sequence of events. The CEO of Spar Ireland is Leo Crawford, who is also the Chairman of Spar International. I sit on the Spar International Board with him, so we have a good rapport. What transpired is that they had sorted out a big bank restructuring, to be exercised in November. Having just done that, in February they were informed that one of the banks wanted to withdraw from Ireland, so they were left looking for an equity partner, to come into the business. They approached a number of other hedge funds and the like, as well as ourselves. With the good rapport we’ve got, we got into discussions. That was way back in March, so it has taken a long time to come into fruition, but finally we’ve done the deal. The other deals were better for them – financially – but they preferred our deal because of our expertise, our association with Spar, our relationships that we have and we go back together with Spar Ireland for 50 years, and Spar International.

ALEC HOGG: It’s a nice story but they got into trouble. What’s going to make sure that you don’t get into trouble as well?

GRAHAM O’CONNOR: Well, they got into trouble because they were very highly geared in the early 2000’s, when they did the management buyouts. Since then, in November last year, over €100m had written off their debt and now, another €75m is being written off. It is now within manageable proportions, and the operations always have been okay. They suffered like everybody else in Ireland, in 2008 with the crash, where the proxy market crashed some 70 percent. They are now coming out of that. The economy is much stronger, and the financials are much more solid, so I’m very excited about the deal. It’s a great deal for us and we’ll do very well out of it.


ALEC HOGG: Spar is a different business in South Africa though, to the one that is in Europe. They don’t have Super Spars over there. They haven’t been as innovative as you have been in this country. Are you going to be able to inject any of that intellectual property?

GRAHAM O’CONNOR: Well that’s not altogether true Alec.  In Austria, who’s a worldwide number one Spar country, they’ve got Inter Spars, which are 4.500 square meters, and a whole number of them and they are very strong with the big format stores. In Ireland, probably 30 of those would qualify as Super Spars, so we certainly, have a base to work from. It’s not like we are going with little corner stalls and four-quart stores and trying to move to larger, format stores, definitely not.

ALEC HOGG: Well, that’s good news indeed, so the market has got this one right. The share price up five-and-a-half percent, we were a little concerned at the price being that cheap but I think, Graham O’Connor, the Chief Executive of Spar has explained it was an opportunistic acquisition. Right place, right time, right relationships, which is what business is all about; it is all about relationships, isn’t it, Gugu?

GUGULETHU MFUPHI:  Indeed, relationships everywhere Alec, which hopefully, do lead onto some kinds of fruitful benefits.

GoHighLevel
gohighlevel gohighlevel login gohighlevel pricing gohighlevel crm gohighlevel api gohighlevel support gohighlevel review gohighlevel logo what is gohighlevel gohighlevel affiliate gohighlevel integrations gohighlevel features gohighlevel app gohighlevel reviews gohighlevel training gohighlevel snapshots gohighlevel zapier app gohighlevel gohighlevel alternatives Agency Arcade, About Us - Agency Arcade, Contact Us - Agency Arcade, Our Services - Agency Arcade gohighlevel pricegohighlevel pricing guidegohighlevel api gohighlevel officialgohighlevel plansgohighlevel Funnelsgohighlevel Free Trialgohighlevel SAASgohighlevel Websitesgohighlevel Experts