Majestic Wine PLC – Proposed sale of Majestic Retail and Commercial

Majestic Wine PLC – Proposed sale of Majestic Retail and Commercial

Proposed sale of Majestic Retail and Commercial and related assets
for approximately £100 million

Majestic Wine PLC (“Majestic”, the “Group” or the “Company”) today announces that it has entered into an agreement to sell Majestic Wine Warehouses Limited (“MWWL”) and Les Celliers de Calais S.A.S. (“LCDC”), which together comprise the Majestic Retail and Commercial businesses (“Majestic Retail and Commercial”) to CF Bacchus Holdings Limited (“BidCo”), a vehicle controlled by funds managed by Fortress Investment Group LLC, for a total consideration of £95m (the “Disposal”).

A separate sale of one freehold property previously owned by MWWL to an independent third party is expected to realise a further £5m subject to approval of a planning application for redevelopment, bringing total proceeds to approximately £100m.

These transactions represent a major milestone in the Group’s history, enabling the Board to focus on driving growth in the Naked Wines business (“Naked”), which has a disruptive online model and operates in fast growing markets.

Highlights

  • Binding agreement to sell the combined Majestic Retail and Commercial businesses for a total consideration of £95m:
    • BidCo will pay initial cash consideration of £78m for the shares of MWWL and LCDC, the two companies through which Majestic Retail and Commercial trade;
    • An additional £5m of consideration payable in cash is deferred for two years, and contingent on the post-Brexit regulatory landscape and performance of LCDC (comprising the Group’s French operations);
    • A further £12m of consideration will be retained by BidCo in the form of a loan note (the “Loan Note”) which will be an unsecured interest-bearing loan from the Company to BidCo due to be repaid by no later than five years from completion of the Disposal;
    • The Disposal is conditional on the approval of the Group’s shareholders at a General Meeting, EU regulatory clearance and satisfactory transfer of MWWL’s bonding arrangements; and
    • Completion of the Disposal is expected to occur in the fourth quarter of 2019.
  • A separate agreement to sell a freehold property for net proceeds of £5m plus potential overage payments has been signed with a property developer. Completion is subject to obtaining planning approval for the redevelopment.
  • The net proceeds of both transactions will initially be used towards:
    • Eliminating the Group’s debt;
    • Investing in the growth of Naked; and
    • Returning £3.8m to shareholders by way of a special dividend of 5.2p per share, as announced with the full year results on 13 June 2019.
  • Naked is currently testing a number of initiatives, and may develop options for additional initiatives, which have the potential to increase its rate of investment and growth. Therefore, any further returns to shareholders will be considered once the Company has realised additional proceeds from its ongoing program of sales and clarified its future capital requirements.
  • The Disposal is subject to Majestic shareholder approval. A circular containing further details of the proposed Disposal and containing the notice convening a General Meeting to consider a resolution to approve the Disposal will be sent to Group shareholders as soon as practicable.
  • The Disposal is unanimously recommended by the Board.
  • Irrevocable undertakings or letters of intent have been received from shareholders holding shares representing, in aggregate, approximately 27 per cent of the issued ordinary share capital of the Company.

Commenting on the Disposal, Rowan Gormley, CEO of Majestic, said:

“I am delighted that we have managed to secure an independent future for both Naked and Majestic Retail and Commercial, allowing both companies to pursue growth by focusing on their unique propositions.

I would like to thank all staff, customers and suppliers for their loyalty during this process.

We look forward to the future and continuing to focus on what we do best… sharing our spectacular wines from our hundreds of talented winemakers with our customers!”

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