Country Road has agreed to buy fellow fashion retailer Witchery Australia for $172 million.
The acquisition will be partly funded by through a one-for-two pro-rata renounceable rights issue at $2.66 per share to raise $92 million.
Country Road's 88 per cent shareholder Woolworths has said it will participate in its pro-rata share of the entitlement.
The Witchery Group comprises the Witchery and the Mimco brands.
Witchery has been operating for 40 years and offers women’s, men’s and children’s clothing and accessories. It has 210 stores across Australia, New Zealand, South Africa and Singapore.
Mimco is an Australian designer of accessories and operates 96 stores in Australia, New Zealand and Singapore.
Country Road chairman Ian Moir said the acquisition would give Country Road a stronger position in the Australian retail sector.
‘‘The acquisition of Witchery Group creates one of Australia’s largest speciality fashion retailers with complementary brands and a strong position in the mid- to upper-tier specialist retail sector,’’ Mr Moir said.
‘‘The acquisition delivers an attractive portfolio of owned brands, greater scale, diversified revenue streams and industry leading margins.’’
Country Road on July 17 announced its total sales had grown by 1.8 per cent on the previous year to $419 million but Australasian sales had contracted 2.6 per cent, with like-for-like sales down 6.6 per cent.
The company said it expected retail conditions to remain challenging in the short term and its outlook remained conservative.
On completion of the acquisition, current Country Road chief executive Howard Goldberg will leave the company and be replaced by Witchery chief executive Ian Nairn.
Country Road’s acquisition of Witchery is expected to be completed by October 2012, once certain conditions have been satisfied.
AAP