Spar and Mace franchise owner BWG aims to open as many as 40 new convenience stores a year following the completion of a €390 million buyout of the group by its three executive directors.
Chief executive Leo Crawford, finance director John O'Donnell and property director John Clohisey will each hold about a third of BWG. The deal demonstrates the continued strength of a sector that benefits from the willingness of time-poor consumers to pay a premium for longer opening hours and convenient store locations.
With annual sales of some €1.2 billion, BWG's network of 25 cash-and-carry outlets is one of the biggest wholesalers to the Irish retail trade. It supplies 439 Spar, Eurospar and Spar Express outlets and 130 Mace stores in Ireland, and 327 Spar stores in south-west England. About 140 of the Irish stores are company-owned and operated by franchisees.
The main beneficiary of the transaction is the British-based Cognetas European Fund, the former Electra Partners Europe private equity vehicle that led a €220 million buyout of BWG from Pernod Ricard in 2002. The deal comes well within the five-year timeline that the fund set on its investment.
Cognetas is estimated to have realised a profit of some €110.5 million from its 65 per cent shareholding in BWG on yesterday's transaction.
The fund was also a significant beneficiary of BWG's sale last January of the Bargain Booze off-licence chain in Britain for some €93 million, a deal that enabled the group to clear its debt pile of €90 million.
The other shareholders in BWG's old ownership structure were Mr Clohisey's vehicle, Newhill Ltd, which held 20 per cent, and Mr Crawford's management team, which held a 15 per cent stake in the business.
Mr Crawford, Mr O'Donnell and Mr Clohisey will acquire their personal interests in BWG via a newly-incorporated company called Triode Investments Ltd. They are funding about 20 per cent of the transaction costs - some €78 million - with the remaining €312 million sourced in debt finance from AIB Capital Markets.
NCB Corporate Finance advised Triode and IBI Corporate Finance advised Cognetas. Former Anglo Irish Bank chairman Peter Murray has been appointed chairman of Triode.
"The three of us were always keen to stay involved in the business from a personal perspective," said Mr Crawford. "We think we paid a very fair price for it. Both sides are happy."
While stating BWG would concentrate on its Irish business in the immediate future, he said there were no plans to sell on Appleby Westward, the vehicle that owns its English interests.
Citing demographic trends, Mr Crawford said the BWG business was well-positioned to open 40 new stores a year. The group aims in the short term to increase the number of Eurospar stores to 50 from 40.
