Etam goes to French group for pounds 93m

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The Independent Online
Etam, the troubled womenswear retailer, has accepted a pounds 93m takeover from its French namesake, Etam Developpement. The deal brings together two separate companies founded by the same family in the 1920s. But it ends the hopes of the privately owned New Look of achieving a stock market listing via a reverse takeover, as Nigel Cope, City Correspondent, reports.

The deal ends weeks of speculation about the future of Etam which announced last month that it was in talks that could lead to a takeover. New Look which was tipped early on as the most likely bidder, said yesterday that it was approached by Etam earlier this year but had no plans to make a counter-offer. It will concentrate instead on organic growth but a stock market listing in the next couple of years is considered likely.

Etam Developpement said the deal would bring together the different parts of the Etam brand to form a powerful force with almost 1,000 shops. The French division already has 700 outlets in France, Belgium, Luxembourg Spain and Germany. These operate under the Etam and "1,2,3" formats.

It is expected to spend around pounds 300m over the next three or four years on turning around the loss-making UK company. Etam has 215 stores in the UK but has been struggling with poor buying and stock problems.

No store closures or head office cuts are planned. But the new French owners will focus on a faster roll-out of the new-format Etam store, which has achieved good results. It said the larger group would also benefit from greater buying power.

Etam Developpement is offering 135p per share, valuing the group at pounds 93m. This is a 23 per cent premium to the share price before bid speculation surfaced last month. Etam shares closed 13.5p higher yesterday at 133.5p.

It has already received irrevocable undertakings from the Oceana Group headed by Michael Lewis and other board members which account for 46 per cent of Etam shares. Oceana is taking the share alternative, which will give it 8 per cent of the enlarged group.

Etam was founded in 1916 in Germany as Etablishments Mayer by Max Lindemann. Initially a manufacturer of stockings it moved into retailing in 1928 and the UK company was established in 1923. However, the businesses were always kept separate. In the UK Etam became known as "Everything To Attract a Man" with a high fashion, Essex-girl image.

The shops will keep their brand identity and Nick Hollingworth will remain chief executive. Five top managers from the French group will move to Britain to help run the UK business. Michael Lewis and Raymond Davies, two of the Etam board, will join the supervisory board of Etam Developpement.

Last week Etam reported increased losses of pounds 9.55m for the half year.