Woolworths has sold the Dick Smith chain to Australian private equity firm Anchorage Capital Partners for a bargain basement price of $20 million.
With Dick Smith free of debt and with assets of $290 million, the $20 million price tag for the 325 store/4500 employee chain seems low.
Woolworths will be free of any further exposure to Dick Smith’s financial fortunes, having already taken a $420 million write-down and now fully divested itself of the struggling (but still profitable) consumer electronics chain.
Woolworths has previously flagged a boost to the consumer electronics/digital lifestyle products departments in its Big W stores following the divesting of the Dick Smith business. This is probably bad news for photo specialists and ‘discount’ competitors such as Harvey Norman alike, as Big W is in a position to further use below-cost Fujifilm prints as a ‘honeypot’ to lure potential consumer electronics customers.
Anchorage, which has a reputation as a turnaround specialist, seems intent on running the chain as a going concern rather than stripping out value, as it has hired respected retail veteran Nick Abboud from Myer to run Dick Smith, and stated there is no intention to close any more outlets.
It is Anchorage’s intention to maintain the current network of 325 stores across Australia and New Zealand and to consider selective network expansion over time where appropriate, said Phillip Cave, chairman of Anchorage.
The new Dick Smith board will comprise Phillip Cave as chair, Anchorage partner Michael Briggs, Nick Abboud, and Bill Wavish, the former executive chairman of Myer.
When Woolworths first announced the divestment of Dick Smith nine months ago, a sale price of up to $100 million was being quoted.
Woolworths also announced it was offloading its stake in consumer electronics whoelsale business Woolworths Wholesale India to Infiniti Retail Limited (owned by Tata Sons) for $35 million. With the sale of the Dick Smith business, a CE wholesale arm no longer made strategic sense.