On 30 April 2018, French Connection Group PLC (“French Connection”), together with Jamie and Jessica Seaton (the “Seatons”) (together, the “Sellers”), announced that they had completed the sale of Toast (Mail Order) Limited (“Toast”) to BESTSELLER UNITED A/S (“BESTSELLER), for gross proceeds of £23.3 million (the “Disposal”), comprising consideration of £21.3 million, payable in cash on completion, and the distribution to the Sellers by way of a pre-completion dividend (the “Dividend”) of surplus cash on Toast’s balance sheet of £2.0 million.
The Disposal represents an enterprise valuation (including the Dividend) of approximately 12.2x Toast’s EBITDA for the year ended 31 January 2018 and will enable French Connection to focus further on its core retail, wholesale and licensing businesses.
French Connection owned 75 per cent. and the Seatons owned 25 per cent. of the issued share capital of Toast. After the payment of management exit awards, the amounts due to the Seatons under the terms of the Toast shareholders’ agreement between Toast, the Seatons and French Connection and transaction costs, the Disposal, including the Dividend, resulted in net cash proceeds to French Connection of approximately £13.9 million.
Background on Toast
Toast is a premium lifestyle brand which sells womenswear, accessories, nightwear, loungewear and homeware. Its headquarters are in London, UK, and it has a second office and warehouse facilities in Swansea, Wales, where it was originally founded. Toast sells its products through three channels: online, a network of twelve retail stores and through wholesale arrangements with John Lewis. In the financial year ended 31 January 2018, Toast generated £19.0 million of revenue compared with £16.7 million for the year ended 31 January 2017, and £1.5 million of underlying operating profit before tax compared with £1.1 million of underlying profit before tax for the year ended 31 January 2017.
Background on BESTSELLER
BESTSELLER is an international fashion company, headquartered in Denmark. It provides fashion clothing and accessories for men, women, teenagers and children through more than 20 individual brands. It sells through approximately 2,700 branded stores, 15,000 multi-brand stores and in department stores across Europe, the Middle East, North America, Latin America, Australia and India, as well as having a large online business. BESTSELLER employs over 15,000 people and has revenue in excess of EUR 3 billion annually.
Commenting on the Disposal, Stephen Marks, Chairman and Chief Executive of French Connection, said:
“This is great news for Toast and its highly talented team. Toast is a very strong brand and I have no doubt that the team will continue to develop it further under BESTSELLER’s ownership and Suzie de Rohan Willner’s continued leadership. The price achieved for Toast reflects the strength of the brand and the business we have built behind it. French Connection will use the transaction proceeds to underpin its core business, allowing us to focus on our priority of returning to sustainable profitability and growth. I would like to extend my thanks to all of the Toast management team for their commitment and dedication to the Toast business. We wish them every success in the future”.
Smith Square acted as sole financial adviser to French Connection.