British department store chain Debenhams has agreed to buy Magasin du Nord, the leading department store chain in Denmark. Debenham’s acquired the chain for £12.3m and is the group’s first acquisition in mainland Europe. The department store retailer bought Ireland’s Roches chain for £19.5m in 2006 and trades from 52 international franchise stores.
Rob Templeman, chief executive, said the contribution from Magasin’s six stores, which saw turnover of £288.7m in the year to February, would be ‘highly accretive’ for shareholders. Analysts said the acquisition was likely to be earnings neutral for Debenhams in its first year, but would contribute about £8m in year two.
Debenhams has agreed a 25-year lease of the six stores with Solstra Holding, the consortium run by Straumur, the Icelandic investment bank, and the investor Alshair Fiyaz.
Debenhams has been seeking opportunistic acquisitions since it raised £323m in June. The retailer paid off £100m of debt and bought the Principles fashion brand in October.
Andy Wade, retail analyst at Numis said: “It’s the sort of deal Debenhams said they would pursue. They’ve still got cash to spend following the rights issue, even after paying down some debt.
“If Magasin delivers what Debenhams is predicting then it looks like a cheap acquisition, that will be accretive on a two-year view.”
Image: Debenhams
Source: FT
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