Brisbane, Australia-based speciality retailer Michael Hill International has signed a binding agreement to acquire select assets and business of Australia’s jewellery and watch retailer Bevilles.
The transaction is subject to certain conditions and has a net enterprise value (EV) of $30.8m (A$45.1m).
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It has been provided in the form of upfront consideration, after including a minimum $668,600 (A$1m) earn-out payments for over two years and net of working capital benefit adjustments.
This value represents an EV/earnings before interest, taxes, depreciation, and amortisation (EBITDA) multiple of approximately 5.6x on the basis of a potential adjusted fiscal year (FY) 23 underlying EBITDA of around $5.3m (A$8m).
Bevilles is projected to report $40.12m (A$60m) to $43.46m (A$65m) in sales, with adjusted underlying EBITDA of $5m (A$7.5m) to $5.6m (A$8.5m) in the FY23.
Michael Hill chairman Robert Fyfe said: “It ticks so many boxes especially in the current economic environment as customers seek out value for money. The Bevilles store network is under-penetrated and ready for growth, and the Michael Hill team will partner with Bevilles to provide expertise to grow the store portfolio and unlock synergies.”
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By GlobalDataThe officials of the two companies have also agreed to abide by a two-year ambassadorial arrangement.
Under this, Michael Hill will offer new employment contracts to Bevilles’ employees while Bevilles’ CEO Michelle Stanton will be rewarded for her contributions to the Bevilles business.
Michael Hill said that this deal, which is expected to complete later this year, is immediately earnings per share (EPS) accretive.
It is now subject to certain conditions and necessary regulatory approvals, including counterparty consent for transferring leases and key contracts and clearances from ACCC and Fair Work Commission, among other things.
Michael Hill CEO and managing director Daniel Bracken said: “We see meaningful growth potential and EBITDA enhancement opportunities embedded within the business, which we will unlock in the short to medium term and the transaction is expected to be immediately EPS accretive.”
Following this acquisition, Michael Hill will own and operate 174 stores in Australia, 47 in New Zealand and 86 in Canada, along with other online sales channels, including online pure-play brands.
