Sale of Jet and Edgars brands to TFG could save thousands of jobs
TFG will be taking over the most profitable Jet and Edgars stores.
Edcon Holdings has reportedly agreed to sell part of South African clothing chain Edgars to TFG, a private equity-backed regional rival, potentially safeguarding a 91-year-old brand and saving thousands of jobs.
On 10 July 2020, TFG submitted a conditional offer to acquire certain commercially viable stores and selected assets of JET, a division of Edcon for a cash purchase consideration of R480 million.
The group will now be able to take over the operation of the most profitable Edcon stores and could save a significant portion of the group’s 17,000 permanent staff members
Said TFG in a recent SENS Statement: “As part of the conditional offer, TFG will assume the operational commitments associated with the Commercially Viable Stores only, such as employee and lease commitments, albeit on a renegotiated basis. Certain head office staff and functions will also be assumed. TFG is finalising its assessment of the capital requirements of the business and currently does not believe this would result in a significant change in the capital requirements for the overall TFG Group.”
JET is a leading Southern African retailer and would provide TFG with a strategically important expansion into the value segment of the Southern African retail apparel market. The Proposed Transaction enables TFG to acquire selected parts of the JET business, a unique opportunity which previously was not possible and is expected to give TFG significant scale at an attractive price.
“The transaction construct provides TFG with structural risk mitigants, as detailed below, and establishes a value retail pillar for the TFG business that would be costly and difficult to replicate organically. The Proposed Transaction will also include the transfer of selected key executives and staff of JET to ensure sufficient management capacity and continuity to deliver on the current turnaround plan for JET and discussions are well advanced in terms of a proposed transition plan.”