George Davies, the man who built up the Next chain of clothes shops in the 1980s, has sold his latest clothing venture to the Asda stores group for up to pounds 15.9m. The George Davies Partnership exclusively designs and supplies the George range of clothing for 170 Asda outlets in the UK and is set to form a key part of the group's growth strategy for the future.
Asda already owns an effective 20 per cent stake and will now acquire the rest of the equity through the acquisition of a holding company, George Davies Holdings, paying pounds 12m over two years and an additional pounds 3.9m for the cash in the business.
Mr Davies is thought to have been tied into the future of the operation through a three-year bonus scheme, although no details have been revealed. The business is being bought from "a number of trusts and individuals", but Asda refused to reveal how much of the sale price will go to Mr Davies. In the last financial year, Bandsound, an intermediate holding company, is reported to have paid dividends of pounds 2.7m, which would suggest that close to pounds 2.2m went to the company now being sold by Mr Davies.
Asda announced earlier this year that it intended to expandthe clothing business into the second-biggest in the UK after Marks & Spencer's St Michael label.
The George Davies Partnership had earnings of pounds 3m last year, which would make the deal slightly earnings-enhancing, according to Phil Cox, Asda's finance director.
He confirmed that the intention was to double sales, worth pounds 240m in 1994, over the next three years.