Spar South Africa, a publicly-quoted wholesaler and distributor, is to pay €55 million for an 80 per cent stake in the BWG Group, which owns the Spar brand in Ireland. The new partnership will have up to € 100 million to invest in the expansion of BWG's wholesale and convenience retailing operations over the next five years, and the new joint venture will be owned 80 per cent by Spar South Africa and 20 per cent by Leo Crawford, John Clohisey and John O'Donnell.
The deal also secures a further reduction in BWG's borrowings following a buyback of exiting banks' debts. This further reduction in debt comes on top of that achieved as part of a successful refinancing concluded in November 2013, which also saw BWG agree new five year banking facilities. These facilities have been reaffirmed by BWG's lenders as part of this transaction with Bank of Ireland and AIB increasing their commitment.
BWG, which has 421 Spar stores and an estimated 35 per cent share of the Irish convenience store market with turnover of about €1.2 billion, will continue to be led by group chief executive, Leo Crawford, and the existing management team and there will be no change to the structure or composition of the existing businesses.
Commenting on the new partnership, Mr Crawford said: “This is a very positive and exciting development for BWG. In Spar South Africa we have secured a major international retail player as a strategic partner and a long-term investor in our business. We have known Spar South Africa for many years and they are a great fit for BWG. We look forward to working with their team to accelerate the expansion of our operations and the growth of our wholesale and retail businesses in Ireland and the south west of England.”
Spar South Africa is wholesaler and distributor to over 1,800 independent retailers spread across Southern Africa with annual sales of around € 3.5 billion and a market capitalisation of approximately € 1.5 billion.
Commenting on behalf of Spar South Africa, Graham O’Connor, group chief executive said: “BWG is an excellent strategic fit for SPAR South Africa. Apart from the significant additional financial strength we will bring to the business, the deal will bolster BWG’s purchasing power, deepen our expertise in store formats and design and facilitate knowledge sharing across all aspects of the convenience food retail sector including logistics, warehousing and distribution.”
