Sold! Pac Brands offloads shoe brands

 

sale, contract, Pacific Brands has sold a range of its shoe and clothing brands, including Volley, to several buyers for $39 million.

Shoe brands Volley, Hush Puppies, and Clarks has been bought by private equity firm Anchorage Capital Partners, while Dunlop and Slazenger has been sold to the UK company that owns the brands outside of Australia and New Zealand.

Pacific Brands said it will incur a loss of about $30 million on the sale.

The current value of the brands stands at $66 million, it said.

The brands were part of the company’s Brand Collective division, which made a loss of $22.3 million in the 2013/14 year.

The sale continues Pacific Brands’ efforts to increase its focus on its leading brands, Bonds and Sheridan.

“While this has been a complicated divestment to execute, the transactions are all unconditional and should be completed within two weeks with minimal disruption to customers and our core business,” CEO, David Bortolussi, said.

“From a pricing perspective, the divestment represents good value to our shareholders for an unprofitable division.”

He said the sale completes the company’s strategic review, and will significantly improve its growth prospects.

To build shareholder value, Pacific Brands will consider further investment in its remaining brands, its stores and distribution, Bortolussi said.

Pacific Brands shares were up two cents, or four per cent, at 51.5 cents at 1200 AEDT.

AAP

Comments

1 comment

  1. Brett Stevenson posted on November 19, 2014

    I think one can seriously regard Pacific Brands as a Case Study in a potentially great Australian company that has the hit the 'rocky shores' because of poor board oversight and terrible management while at the same time those very people as well as their professional advisers such as the Macquarie Bank & KPMG have reaped and continue to rich rewards. Lets just review a few examples. 1. A seven year fall. In the 2007 financial year it had revenue of $1.82 billion, book assets of $1.3 billion (including intangible assets of $1.5 billion, yes does that makes it a negative asset company?), and mkt value of $1.75 billion In the 2014 financial year it had revenue of $1.32 billion, book assets of $0.44 billion (including intangible assets of $.35 billion giving it tangible assets of just $0.1 billion), and mkt value of $0.5 billion 2. Previous CEO (Sue Morphett) paid remuneration bonus even though she had not achieved the performance measures. 2. KPMG the auditors in 2014 paid $837,000 for audit services and $327,000 for other services. Of course no conflict of interest per the notes to the accounts but one has to ask whether they really take CLERP 9 seriously and see the potential conflict as the elephant in the room that everyone seems to ignore these days. Is auditing now seen as a source of 'other services' fees from their clients? So much for independence and keeping an objective distance. 3. What sort of fees and bonuses do you think are paid to the Investment bank advisers and to senior management and the board when the assets of late have been/are sold (such as Workwear to Wesfarmers and Footwear brands to Anchorage Capital)? It appears to be a very rewarding (and easy) exercise to downsize. Makes one wonder how they would go if they thought about growing and building the business. 4. Is it a fair question to ask whether a private equity purchases of a business (such as is occurring with Anchorage buying the footwear brands) is an indication of the failure of the Pac Brands management and board. The success of Dick Smith must raise that question of the Woolworths Board. 5. What incentives are in place to force the current CEO of PacBrands to grow the business with what it has, and not to sell off the crown jewels. Or perhaps even to 'unreward' the Pac Brands senior management underperformance over the years? I wonder if David Bortolussi (the PacBrands CEO) sees his fiduciary duty to not just consider 'approaches by others to buy part of the business (as reported in todays AFR) but also to stop the decline of the business and grow it with what they have. Its not a pretty story. You look at the directors and management names of Pac Brands over the last decade (and there are some pretty big heavy hitters there), and have to ask what were they doing and thinking? Oh well, at least they were (and continue to be) paid well for their efforts.

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