BWG Group announces new ownership structure
11 August 2014
BWG Group announced today (11 August) that Spar South Africa is to invest €55 million in a joint venture with the BWG management team to acquire the BWG group of companies.
The new joint venture will be owned 80% by Spar South Africa and 20% by Leo Crawford, John Clohisey and John O’Donnell.
Spar South Africa is a leading publicly-quoted wholesaler and distributor to over 1,800 independent retailers spread across Southern Africa with annual sales of around €3.5 billion and a market capitalisation of approximately €1.5 billion.
Today’s announcement also secures a further reduction in BWG’s borrowings following a buyback of exiting banks’ debts. This further reduction in debt comes on top of that achieved as part of a successful refinancing concluded in November 2013, which also saw BWG agree new five year banking facilities. These facilities have been reaffirmed by BWG’s lenders as part of this transaction with Bank of Ireland and AIB increasing their commitment.
The new partnership will have up to €100 million to invest in the expansion of BWG’s leading wholesale and convenience retailing operations over the next five years.
BWG will continue to be led by Group CEO, Leo Crawford, and the existing management team and there will be no change to the structure or composition of the existing businesses.
Commenting on the new partnership, Leo Crawford said: “This is a very positive and exciting development for BWG. In Spar South Africa we have secured a major international retail player as a strategic partner and a long-term investor in our business. We have known SPAR South Africa for many years and they are a great fit for BWG. We look forward to working with their team to accelerate the expansion of our operations and the growth of our wholesale and retail businesses in Ireland and the South West of England.”
BWG and Spar South Africa are well known to one another as both have been members of Spar International for over 50 years. Leo Crawford is the current chairman of the Board of Spar International.
Commenting on behalf of Spar South Africa, Graham O’Connor, Group CEO said: “BWG is an excellent strategic fit for Spar South Africa. Apart from the significant additional financial strength we will bring to the business, the deal will bolster BWG’s purchasing power, deepen our expertise in store formats and design and facilitate knowledge sharing across all aspects of the convenience food retail sector including logistics, warehousing and distribution.”
A spokesperson for Bank of Ireland acting as agent, said it welcomed the joint venture and said it would continue to “support the business as it embarks on a growth strategy across Ireland and the UK”.
BWG was advised by Investec Corporate Finance (Ireland) and McCann Fitzgerald.
ShelfLife publisher John McDonald commented on the announcement: “This is a great strategic move by Leo Crawford who has steered the business through two previous buy-outs and as recently as November finalised a debt restructuring plan with the banks which resulted in an estimated €100 million being wiped from the group’s property borrowings. BWG Group, which had debts of about €300 million before the restructuring, then finalised a five-year arrangement with its lenders Bank of Ireland, AIB, Ulster Bank, Bank of Scotland (Ireland) and Blackstone. Now, nine months later the senior management team of Leo Crawford, John Clohisey and John O’Donnell has landed a new joint venture partner which will reposition the company for growth without the stress of its previous debt.”