TFG completes its third UK foray with acquisition of Hobbs

ACQUISITION-HUNGRY retail firm TFG (The Foschini Group) yesterday completed its third foray into the UK market in less than three years with the acquisition of Hobbs, a British womenswear brand, which has 140 outlets across Europe and the US for an undisclosed fee.

Doug Murray, the chief executive of TFG, yesterday said that Hobbs was a well-established British brand with a loyal customer base and an excellent reputation for the design and retail of high-quality clothing and footwear.

“I am excited about bringing both the brand and the management team into TFG’s portfolio of brands and delighted with our continued growth in the UK,” Murray said.

While both parties could not be drawn to reveal the transaction fee, in July reports emerged that TFG was eyeing a possible takeover of Hobbs, after private equity group 3i put Hobbs on the market in January with an alleged £80 million (R1.49 billion) price tag.

However, the reports also said that TFG was not willing to pay the asked price tag. Hobbs was founded in Hampstead in 1981 by husband-andwife team Yoram and Marilyn Anselm.

The deal, which is subject to regulatory approvals will mark an end to 3i’s 13 years ownership of Hobbs it paid £111m for in 2004. However, by January of 2014 the value of its 47 percent stake in the company had alarmingly dropped to £21m.

TFG chief financial officer Anthony Thünstrom yesterday said that the acquisition would be funded using general banking facilities in South Africa and that he believed the group had agreed on a fair price for the asset.

One of the major drawcards for TFG in the deal is Hobbs’s online presence. Besides its 149 outlets, Hobbs also sells on-line to customers in 49 countries. Murray this week said the 6 percent contribution from on-line sales would grow in the period ahead.

TFG first entered the UK market through the acquisition of womenswear brand Phase Eight in 2015 for £140m, giving it an 85 percent stake in the women’s fashion seller. This transaction was followed by the acquisition of Whistles in 2016.

The group also has a presence in Australia, which it strengthened earlier this year.

The group also has a presence in the Australian market, which it strengthened earlier this year through its acquisition of Retail Apparel Group (RAG), a leading Australian menswear apparel retailer, adding to its operation of G-Star Raw franchise stores in Australia. TFG raised R2.5bn via an accelerated book build to finance the acquisition of RAG.

Meg Lustman, the chief executive of Hobbs, said the acquisition by TFG represented a further step on the company’s journey to develop a truly successful international and omni-channel Hobbs brand.

“With TFG’s existing experience managing desirable brands, and their deep understanding of the sector, we are thrilled with today’s announcement and their commitment to assist us to drive our future growth,” Lustman said.

TFG shares fell 0.07 percent to close at R142.68 on the JSE yesterday.