Peacock pays £51.3m for rival Bon Marché
Thursday 04 July 2002
The womenswear group Peacock became Britain's second-biggest discount retailer yesterday after it acquired its privately owned rival Bon Marché for £51.3m.
The part-cash, part-shares deal, which puts the combined group's share of the womenswear market behind Matalan, nets Bon Marché's founders, the Chima brothers, £35.7m for their 70 per cent stake. Analysts said the move made strategic sense because the two companies targeted different customer groups. Peacock focuses on women aged 25 to 45, while Bon Marché's customer base is the over 45s.
Gurchait and Gurnaik Chima founded the Huddersfield-based Bon Marché in 1982 and have since expanded the group to 258 shops. The Chima brothers, who will have an 11.3 per cent stake in the enlarged group, will continue running Bon Marché as a separate brand. Steve Bullas, its chief executive, and Jonathan Fellows, its finance director, will also stay.
But in a strange quirk, the deal marks the end of another possible brother pairing as Steve Bullas's brother, Michael, announced yesterday that he was resigning from his position as Peacock's trading director.
"Sometimes brothers work together, sometimes they don't," Keith Bryant, Peacock's finance director, said. He added that Michael Bullas, who has been with Peacock for nine years, had brought the two groups together by introducing them to his brother.
Mr Fellows said the deal fitted Bon Marché's goal of becoming a public company. "We were gearing up towards a flotation. But it was becoming increasingly clear market sentiment isn't moving in the right direction," he said.
Peacock, whose chief executive is Richard Kirk, said there was scope to double its store base of more than 700 units including Bon Marché.
Iain McDonald, a retail analyst at Numis Securities, said that while the deal "widened the breath" of Peacock, he remained nervous because competition at the value retail end was becoming intense. "Matalan and Asda's George are becoming more aggressive on pricing and capacity. Bon Marché is not the answer [to that]," he said.
Peacock, which said underlying sales had fallen 4.4 per cent in the first 13 weeks of its year, will take on £23.7m of Bon Marché's debt. The enlarged group will have sales of £400m.
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