Boots offloads AG Stanley

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The Independent Online
Boots drew a line under one of the worst parts of its disastrous Ward White acquisition yesterday when it sold the loss-making AG Stanley home decorating business to a venture capital buyer.

The sale, which includes the Fads and Homestyle trading formats, will see Boots take a pounds 180m write-off which includes pounds 122m for goodwill. The buyer, Alchemy Partners, is paying a nominal sum while Boots has guaranteed to leave the business with a cash balance of pounds 7.5m. In effect, Boots is paying Alchemy to take the business away.

The deal covers the 121 Fads branches, which are largely small high street sites, and 201 Homestyle stores, including some edge-of-town locations.

AG Stanley has not made a profit since 1993 and its accumulated losses over the past four years amount to pounds 33.7m. Last year it recorded losses of pounds 11.8m on sales of pounds 109.4m.

Alchemy will continue Boots' strategy of closing many of the Fads stores as well as around 100 smaller branches of Homestyle. While this will mean significant redundancies among the group's 2,400 staff, Alchemy's senior partner, Jon Moulton, said jobs would be created as the company opened more larger Homestyle formats.

It is thought AG Stanley will be groomed for a stock market flotation though no timescale has been set. Mr Moulton will be chairman of the group.

Boots acquired AG Stanley as part of the ill-starred Ward White acquisition in 1989 which also included the Halfords car accessories stores. Though it made profits until 1993 it was hit hard by the collapse in the housing market and the shift towards larger out-of-town stores.

Boots said yesterday the deal did not signal the unravelling of the Ward White deal and there were no plans to sell Halfords or Do It All, the DIY business. "They remain part of the Boots family," a spokesman said.

However, analysts speculated that following the sale of Childrens World to Storehouse last year, Boots was increasing its focus on its core business. Do It All is seen as a further candidate for disposal. Boots shares fell 14p to 803p.