Embattled clothing retail group Edcon on Monday confirmed that it has signed a sale agreement of its 90-year-old Edgars chain to Durban-based private retail group Retailability, for an undisclosed amount.
It’s likely however, that the deal has come as a bargain, with Edcon being in the throws of a business rescue.
Edcon said in a statement that the “sale and purchase agreement” with Retailability is for “parts of Edgars”, without mentioning how many stores are included in the deal.
The deal effectively means only the most profitable Edgars stores in South Africa are part of the transaction, which is similar to Edcon’s recently-concluded sale of its Jet chain to JSE-listed TFG.
Negotiations are still underway regarding the sale of its Edgars stores in other African countries.
A retail fashion holding company, Retailability’s retail brands including Legit, Beaver Canoe, and Style. It operates over 460 stores across South Africa, Namibia, Botswana, Lesotho, and eSwatini.
Retailability previously purchased women’s fashion chain, Legit, from Edcon for R637 million back in 2017. At the time the chain had around 216 stores across South Africa.
Th Legit purchase raised Retailability’s national prominence and footprint.
‘Positive step forward’
“We are pleased that we have taken a step closer to closing this sales transaction, which not only indicates confidence in the Edgars business but augments Retailability’s already blue-chip level of retail expertise,” Edcon’s business rescue practitioners (BRPs) said.
“The signing of the sale and purchase agreement is a positive step forward in meeting the objectives of the Edcon business rescue plan, which when successfully concluded, will result in the saving of a significant number of jobs and the continuation of a great iconic Edgars brand,” they added.
The BRPs are targeting for the transaction to be finalised by September, however, they noted that the deal is still subject to various conditions precedent and regulatory approvals, including from competition authorities.
“The parties will now move to work on preparing the signing of the sale and purchase agreements for the Edgars business conducted in the rest of Africa,” the BRPs stated.
While Retailability is not listed on the JSE, the group has a history going back to 1984 and has since 2015 been backed by Johannesburg-based private equity firm Metier.
This article first appeared on Moneyweb and was republished with permission.