Australia's Catalyst exits EziBuy to Woolworths for $274m

EziBuy completed the bolt-on acquisition of New Zealand women's apparel retailer Max Fashions in 2008 for approximately NZ$80 million. This business is not being sold to Woolworths, so Catalyst has yet to fully exit its investment, although it has already recovered more than the principal.

EziBuy was founded by bothers Peter and Gerard Gillespie in 1978 with a single retail outlet in New Zealand. It now services about 600,000 customers each year via an online B2C platform, catalogues and contact centers. The company has its own brands and Catalyst helped set up distribution relationships with retailers such as Otto and Next.

The PE firm also supported development of the online platform and expansion into Australia. More than half of EziBuy's sales are transacted online with Australian customers accounting for 68% of revenues.

"We considered a range of options and talked to numerous parties, and then Woolworths put in a proposal that was worth engaging on 8-9 weeks ago," Trent Peterson, a managing director at Catalyst, told AVCJ. "They are a highly synergistic buyer so it would be difficult for others to match their price."

What Woolworths is getting are direct-to-consumer sales channels and capabilities. Traditional retailers' supply chains are built around distribution to stores, not to customers at home, which presents a challenge for forward and reverse logistics.

"This acquisition will provide us with a unique competitive advantage as we continue to develop our multi-option capabilities. We believe the combination of our retail network, EziBuy's direct selling expertise and our respective loyal customer bases is a winning formula for us," said Woolworths CEO Grant O'Brien, in a statement.

He cited Cellarmasters - a wine distributor bought from Archer Capital in 2011 - as an example of how direct-to-customer channels have previously boosted Woolworths' business.

EziBuy received two rounds of funding in 1999 and 2002, led by New Zealand-based investor Direct Capital. Direct exited when Catalyst Buyout Fund I - a A$390 million ($351 million) vehicle that closed in 2006 - entered the business in 2007.

Catalyst expects to retain Max Fashions for a couple more years. "We still have a range of plans to improve the business," Peterson added. "It is well positioned in New Zealand."

Woolworths' acquisitions of EziBuy is still subject to approval from New Zealand's Overseas Investment Office.

 

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• Topics
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