South African retailer Woolworths said that it has entered into an agreement to sell its Australian upmarket department chain David Jones to private equity fund, Anchorage Capital Partners.
Woolworths paid a big premium to bulk up in Australia via David Jones as part of former chief executive Ian Moir’s ambitions to turn Woolworths into a leading southern hemisphere retailer but overhauling the business was taking longer than expected, forcing the retailer to keep writing down the value of the unit.
Restructuring The Business
His successor Roy Bagattini has been on a mission to improve the performance of David Jones by restructuring its debt, selling off property and closing underperforming stores.
"The strategic rationale at the time of the acquisition did not materialise to the extent originally envisaged," Bagattini said in a statement.
"While David Jones has successfully executed on its turnaround, notwithstanding the Covid-19 disruptions, now is the right time for the business to operate under new ownership, while Woolworths refocuses on its core South African and Australian Country Road Group businesses."
According to a statement issued by Woolworths, the agreement is subject to terms and conditions, and it anticipates the transaction to complete by the end of March 2023, with 'the final proceeds to be determined based on completion accounts to be prepared in due course pursuant to the agreement'.
This transaction concludes a comprehensive strategic review that was undertaken by Woolworths in relation to the David Jones business.
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