| Tue 4 Nov 2003, 11:13 | | Pick 'n Pay in talks to sell Boardmans |
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Pick 'n Pay in talks to sell Boardmans
November 4, 2003
By Vera von Lieres
Cape Town - Grocery chain Pick 'n Pay confirmed yesterday that it was in talks with a handful of listed groups, all believed to be retailers, to sell Boardmans, its homeware business.
As the news filtered through to the market, Pick 'n Pay's share price moved modestly, gaining 1.01 percent.
Analysts said likely buyers with interests in homeware could be Woolworths, Foschini, Edcon, Mr Price, Massmart and Truworths, although unlisted groups like Stuttafords should not be dismissed.
"Of all of those, Woolworths probably offers the best fit," one analyst noted.
Boardmans, estimated to be worth between R150 million and R200 million, makes up less than 0.5 percent of Pick 'n Pay's annual turnover of about R26 million.
It would, therefore, be a small deal for any of the groups, analysts said, explaining the lack of a cautionary announcement.
Martin Rosen, the managing director of Pick 'n Pay Group Enterprises, expected discussions to be wrapped up within two to four weeks.
"This has not been an open bid," Rosen said.
"We are only talking to parties that are interested in taking this business forward as opposed to stripping the company. Of essence is that a potential buyer will take care of the people working there."
Speculation that Boardmans, formed in the early 1980s, was worth between R150 million and R200 million was "more or less in the ballpark".
Nedcor chief executive Tom Boardman was the main driver behind the transformation of Boardmans into a contemporary furniture store before Pick 'n Pay bought the company.
In the past financial year the furniture, linen and homeware business turned a modest profit although Pick 'n Pay does not provide divisional breakdowns.
Chief executive Sean Summers said at the presentation of half-year results that management continued to strategically assess its investment.
Quizzed as to why it was selling, Rosen said the group's core business was grocery retailing, on the one hand targeting the upper end of the market through Pick 'n Pay's retail division and, on the other hand, the lower end of the market through Score and Boxer.
"We recognise that furniture and homeware is not our core competence but with the right focus Boardmans has great potential."
Woolworths' financial director Norman Thomson said it would "evaluate all opportunities".
Meanwhile, Reuters reported Truworths' chief executive as saying his company was not in the running. Both Edcon and Mr Price declined to comment. Foschini executives were unavailable.
Pick 'n Pay stock rose 10c to close at R15 in Johannesburg yesterday.
