Cenomi Retail has signed a share purchase agreement for the acquisition by Abdullah Al-Othaim Fashion Company, a fully owned subsidiary of Abdullah Al-Othaim Investment Company, of 100% of the share capital of Innovative Outfit Trading Company, a subsidiary of Cenomi Retail, that will own the franchise rights for 18 of its brands and their related assets.
The sale forms part of Cenomi Retail’s ongoing transformation program and strategy of focusing on Champion Brands. Cenomi Retail will use the net proceeds from the sale to deleverage the business and focus on Champion brands within the Fashion, Electronics and Food & Beverage categories.
The Brands contributed SAR 238 million to revenue in the nine months to September 30th 2023, 5.7% of Cenomi Retail’s total revenue with the divestment expected to positively impact profitability with EBITDA increasing in the order of SAR 10 million on an annualized basis.
The financial impact of the transaction is expected to be recognized in Q1’24 results upon transaction closing and handover completion.
Abdullah Al-Othaim Fashion Company will acquire the target company along with the franchise rights for the brands and their corresponding 244 stores and assets for the agreed price of SAR 120 million and an additional consideration for inventory on-hand will be calculated at the time of deal closing and store handover which is anticipated in Q1’24.
The transaction is subject to a number of conditions to be completed after signing, including approval of Saudi Arabia’s General Authority for Competition.
Brands involved in the transaction include a diverse selection of prominent high street names across fashion, apparel and beauty categories, including Flormar, Oxxo and Monsoon amongst others; store employees are expected to be hired by the new brands owner as part of the sale.
Dr Günther Helm, Chief Executive Officer at Cenomi Retail, said: “We are pleased to have made this transaction that fully supports the evolution of our brand portfolio and the ambitious transformation journey we are taking at Cenomi Retail. With renewed focus on profitability, we strongly believe in the strategic imperative of backing Champion brands and evolving into a multi category retailer. We remain committed to being the retail brand partner of choice, as well as the number one retailer for consumers in the Kingdom, as the business continues to identify and work with brands that align to our strategic goals.”
Meshaal Bin Omairah, Group CEO at Al-Othaim, said: This acquisition is part of our ongoing strategy to consolidate and expand our consumer facing businesses within and outside of Othaim Malls and will further enhance the positioning of Othaim Fashion as a key player in the value fashion domain in Saudi Arabia.