Ad­vent will sell cloth­ing re­tailer Takko to Apax

The Pak Banker - - Company& -

FRANK­FURT: Apax Part­ners LLP, a London-based pri­vate-eq­uity firm, agreed to ac­quire Takko Hold­ing GmbH from Ad­vent In­ter­na­tional Corp. to gain the Ger­man op­er­a­tor of about 1,500 dis­count cloth­ing stores.

Apax agreed to pay about 1.3 bil­lion eu­ros ($1.7 bil­lion) for Takko, three peo­ple with knowl­edge of the talks said yes­ter­day. The com­pa­nies didn't dis­close the price to­day. The trans­ac­tion is ex­pected to be com­pleted in the first quar­ter of 2011 and must be ap­proved by an­titrust au­thor­i­ties, Bos­ton-based Ad­vent said in a state­ment.

Takko, which is based in Tel­gte, Ger­many, plans to open about 150 stores a year as it ex­pands into east­ern Europe. The re­tailer has an­nual sales of 938 mil­lion eu­ros and 12,500 em­ploy­ees, Ad­vent said. Ad­vent, man­ager of a 6.6 bil­lion-euro lever­aged buy­out fund, is sell­ing Takko af­ter buy­ing it for 770 mil­lion eu­ros in 2007.

"We re­gard the Takko con­cept as hav­ing enor­mous po­ten­tial for ex­pan­sion, but also fur­ther op­por­tu­ni­ties for sales pro­duc­tiv­ity growth," Apax part­ner Chris­tian J. Naether said to­day in a sep­a­rate state­ment. "We fully sup­port the suc­cess­ful man­age- ment team, led by CEO Stephan Swinka, in pur­su­ing its cho­sen growth course."

Apax Part­ners, which in the past year has in­vested or com­mit­ted 2.3 bil­lion eu­ros in seven in­vest­ments across four con­ti­nents, has pre­vi­ously in­vested in re­tail­ers in­clud­ing Tommy Hil­figer and New Look, it said.

Lever­aged buy­out firms pool money from in­vestors to take over com­pa­nies, fi­nanc­ing their pur­chases mostly with debt, with the in­ten­tion of sell­ing them later for a profit. The firms seek to ex­pand or im­prove per­for­mance at com­pa­nies they ac­quire be­fore sell­ing them within about five years.

"We are de­lighted about the part­ner­ship with Apax and the re­sult­ing po­ten­tial for fu­ture growth, es­pe­cially in ecom­merce and in­ter­na­tional ex­pan­sion," Takko Chief Ex­ec­u­tive Of­fi­cer Swinka said in Apax's state­ment. The com­pany will con­tinue to ex­pand in­ter­na­tion­ally and open more stores un­der its new brand "1982," Apax said.

Apax had been com­pet­ing with EQT Part­ners AB as well as joint bid­ders PAI Part­ners and TPG Cap­i­tal, peo­ple fa­mil­iar with the mat­ter said ear­lier this month. Ad­vent had also ex­plored an ini­tial pub­lic of­fer- ing of Takko, the peo­ple said.

Ad­vent was ad­vised by Gold­man Sachs Group Inc. and Deutsche Bank AG as well as law firm Hen­geler Mueller. Apax was ad­vised by No­mura Hold­ings Inc., Lazard Ltd., and Fer­ber & Co. as well as Bain Con­sult­ing, Price­wa­ter­house Coop­ers LLP and Lin­klaters LLP, it said.

Bul­gari gold suc­cumbs to ce­ram­ics with jew­elry hostage: In June, Bill Dod­dridge flew his sin­gle-en­gine Cessna 400 to Twen­ty­nine Palms Air­port near Cal­i­for­nia's Mo­jave Desert and headed for an aban­doned mine, a .45-cal­iber pis­tol on his belt. He was look­ing for gold.

The firearm was to ward off rat­tlesnakes. The pre­cious metal would be a side­line to his jew­elry busi­ness. He sifted through dirt, climbed into shafts, and later bought the prop­erty, shut­tered since World War II.

"If we're not mak­ing money sell­ing gold, we might as well get into min­ing it," says Dod­dridge, 55, chief ex­ec­u­tive of­fi­cer of Tustin, Cal­i­for­ni­abased Gold­enwest Di­a­mond Corp., a pri­vately held com­pany that owns 17 Jew­elry Ex­change stores and an on­line site. "It's a whacked out world."

The ris­ing value of bul- lion-reach­ing a record $1,431.25 an ounce on Dec. 7 - - has up­ended the eco­nom­ics of jew­elry for buy­ers and sell­ers alike, with a mix of out­comes around the world. U.S. pur­chases of gold jew­elry have fallen 36 per­cent by vol­ume in three years. Women in In­dia, where de­mand is boom­ing, are buy­ing hol­low ban­gles made to look like solid gold. Euro­pean jewel­ers are mix­ing the metal with steel and ce­ram­ics. Turk­ish ex­porters are clos­ing of­fices as or­ders fall.

"The jew­elry busi­ness is be­ing held hostage by some­thing com­pletely out of its con­trol," says Michael Lang­ham­mer, CEO of Qual­ity Gold, a Fair­field, Ohio, pri­vately held whole­saler that Lang­ham­mer says is re­design­ing pieces to use more sil­ver.

Gold's price has climbed about 200 per­cent since the de­but in Novem­ber 2004 of a bul­lion-backed ex­change traded fund cre­ated by a World Gold Coun­cil trust, al­low­ing the metal to be acquired on the New York Stock Ex­change as eas­ily as shares.

Global pur­chases of gold jew­elry were $20.9 bil­lion by value in the third quar­ter, 38 per­cent above the year-ago pe­riod, ac­cord­ing to the London-based World Gold Coun­cil, which rep­re­sents min- ing com­pa­nies, and GFMS Ltd., a re­search firm in London. De­mand by vol­ume has di­min­ished in some coun­tries and in­creased in oth­ers, and the gold jew­elry in­dus­try has to ad­just to cus­tomers' buy­ing power depend­ing on where they are.

Not know­ing how high the price will go makes de­cid­ing on styles and in­gre­di­ents a chal­lenge, Dod­dridge says. He acquired the mine, for a sum he won't dis­close, as a de­fense. "Gold is the only thing screw­ing up this busi­ness," says Dod­dridge, who ex­pects his to­tal 2010 sales to be up about 7 per­cent and sales of gold items to be down about 25 per­cent. De­sign­ers are scal­ing back on gold parts or re­ly­ing on gold that isn't as pure.

At Rich­line Group, a man­u­fac­turer in Mount Ver­non, New York, owned by War­ren Buf­fett's Berk­shire Hath­away Inc., 40 per­cent of sales are in gold, com­pared with more than 70 per­cent in 2006, says Chief Mar­ket­ing Of­fi­cer Mark Hanna. Signet Jewel­ers Ltd., with more than 1,300 shops in the U.S. and about 550 in the U.K., is of­fer­ing more sil­ver, tung­sten and ti­ta­nium, says Ed Hrabak, se­nior vice pres­i­dent of mer­chan­dis­ing at the world's largest jew­elry re­tailer. -Bloomberg

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