Indonesian group buys SR Gent

SR Gent, the struggling Marks & Spencer supplier, has been acquired by Indonesian-based group Prospero Investments. The company has been in bid talks since last October.

Prospero is offering 82p per share in cash for the company, valuing it at pounds 30.6m. Peter Wolff and Peter Wetzel, SR Gent's founders who own 62 per cent of the shares between, them have agreed to the deal, which values their combined holdings at pounds 18.4m. The shares closed 8p higher at 79.5p. They stood at more than 100p two years ago.

Prospero, which is controlled by the Indonesian entrepreneur Marimutu Sinivasan, plans to review Gent's manufacturing and stock control processes. However, it says it is committed to Britain as a base for quality manufacturing.

SR Gent supplies M&S with ladieswear such as blouses, dresses and skirts. This business accounts for 90 per cent of the company's sales.

The deal marks the end of sorry period for SR Gent. In October it announced that it was in crisis talks with its bankers and that it had received at least two takeover approaches.

That announcement delayed publication of the company's full year results. They were announced in November showing an pounds 11m loss caused by pounds 16m of exceptional costs for the closure of the Clothing Barn shops. In April it announced interim losses of just under pounds 1m compared with profits of pounds 2.8m last time

The shares have been hit hard. In September the company's shares plunged by 41 per cent when it revealed the cost of the Clothing Barn closure. There were seven stores at the group's factories which sold surplus factory stock. The shops had been hit by weak sales and poor margins.

That withdrawal was the second time SR Gent had been forced into a retreat from the high street. In 1994 it took a pounds 7m provision to pull out of the Susan Woolf fashion stores. Those costs pushed the company into a pounds 4m loss that year.

Other problems in the business have included weather related trading difficulties and a weak South African economy which had damaged sales there.

City speculation on the likely bidder for Gent had also mentioned Claremont Garments, another M&S supplier.

Gent shareholders were asking for a substantial premium to the market price due to its valuable contracts with M&S, thought to be worth pounds 150m a year.