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New Clicks is considering selling up in Australia

Posted On Thursday, 30 October 2003 02:00 Published by
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Law has widened scope for retailer in SA

Industrial Reporter

SOFT goods retailer New Clicks says it is in negotiations that could see it disposing of its interests in New Clicks Australia.

New Clicks made this announcement after its share price dropped 3,89% to R7,17, following speculation it wanted to buy a pharmaceutical distribution business from Mayne in Australia for A400m.

The retailer, which is trading under a cautionary notice, said it had entered into negotiations which might lead to the disposal of New Clicks Australia "at fair value".

New Clicks Australia is composed of retail chain Priceline, kitchenware and giftware retailer House, haircare chain Price Attack as well as pharmacy franchise Priceline Pharmacy.

An analyst said the fact the group was considering exiting from Australia was an admission it needed more cash in its South African operation.

New Clicks said it was focused on the opportunities in SA, given the recent change in legislation regarding ownership of pharmacies in the country. The legislation allows retailers to own pharmacies.

The analyst said there was more to the proposed deal. If the group needed more cash it could have disposed of its noncore businesses like its Discom and Musica chains.

The analyst said that, reading between the lines, it looked like things were not well between the South African and Australian management teams.

While New Clicks denied it was in talks with Mayne, the Sydney Morning Herald said talks between Mayne and New Clicks Australia were "believed to be very advanced, with an agreement on terms expected within the next couple of weeks".

The newspaper quoted someone close to the company as saying: "New Clicks Australia does have an aggressive growth strategy; the company is continually assessing acquisition opportunities and considering different funding options as part of this growth strategy."

But New Clicks said it would be "inappropriate" to invest in Australia at this time because it was committed to refocusing its South African operation.

The sale of the pharmacy business by Mayne would be the third in the past year, following the logistics business and last week's A813m sale of the private hospitals arm, the newspaper said.

New Clicks was getting final approval for the transfer of dispensing licences from pharmacy chain Purchase Milton & Associates (PM&A) which would allow it to run the pharmacies directly. It hoped to convert five PM&A stores into Clicks Pharmacies by year-end.

Before New Clicks explained the matter, there was concern that if the deal went through, the asking price would equal New Clicks' market capitalisation. This was seen as risky, and was behind the share price closing down yesterday.

Meanwhile, Mayne said it had received inquiries regarding the possible sale of its Pharmacy Services business and discussions in relation to these inquiries continued with a number of parties.

The health-care group said while there was no financial or operational necessity to enter into any sale arrangements for any of its divisions, the discussions allowed it to determine if a sale of the pharmacy services business would benefit shareholders. Further disclosure would not be appropriate.

Oct 30 2003 07:27:35:000AM Larry Claasen Business Day 1st Edition

Publisher: Business Day
Source: Business Day
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