Czech fund Penta Investments has offered to buy 40% of Polish retailer Empik Media & Fashion (EM&F) for 410 million zlotys as part of a deal with the retailer’s man shareholder, Eastbridge, to jointly manage the group, with the intention to delist the company from the Warsaw Stock Exchange.
“We think that investment in EM&F represents a challenging opportunity in a retail sector that Penta knows pretty well. We were looking for a high-profile transaction in Poland for some time,” said Jozef Janov, Investment Director of Penta, in a statement issued Tuesday.
“EM&F meets number of our investment criteria and in this case we are flexible as for our investment horizon. Last but not least we are doing this investment together with Eastbridge, being the founder of EM&F, which along with our financial capacity makes a perspective ground for a successful story.”
According to the agreement, a designated special purpose vehicle wholly owned by Penta — Xandora Holdings Limited — will be the only entity to acquire shares in the public tender offer, at 9.85 zloty per share, the Czech fund said.
The price proposed in the public tender offer presents an 11.2% and 10.7% premium to 3 and 6 months average share price, respectively, Penta said. The tender offer subscription period will last from April 2 until May 8 and is being managed by UniCredit CAIB.
Depending on the number of shares acquired in the public tender offer, Penta will have an option to acquire additional EM&F shares from Eastbridge (approximately up to 13% of the overall number of shares in the company) at the tender offer price.
Subject to the successful outcome of the public tender offer, Penta agreed to refinance Eastbridge's long-term debt secured on EM&F shares (necessary in case of the company delisting from the Warsaw bourse) and Eastbridge will pledge part of its EM&F shares as a collateral for Penta financing.
“EM&F will go through an expensive restructuring process of the fashion division, face growing competition, while requiring additional investments for further development and buy-out of its minority partners in operating subsidiaries. Additionally, EM&F considers several international acquisitions,” said Maciej Dyjas, President of the Management Board of Eastbridge.
“We have considered a number of alternatives including the sale of selected assets and various potential financial partners. We concluded that Penta proposed the highest price, while being able, together with Eastbridge, to provide EM&F with a flexible financing package if needed.”