Sources inform "Globes" that following protracted negotiations, Gottex Brands and Sakal Holdings have agreed on a deal in which Gottex Brands will buy 50% of the luxury brands business of the Arcadia International group from Sakal Holdings. This business includes the brands and chains Topshop (10 branches), Topmen (four branches), Dorothy Perkins (three branches), and Miss Selfridge (three branches). The deal requires approval from the Antitrust Authority director general.
"Globes" broke the news of the negotiations in January 2014. Sales of the Top Shop and Top Men brands are estimated at NIS 60-70 million a year, with an 18-20% operating profit, which is considered high for the fashion industry. Gottex will pay NIS 28 million, reflecting a NIS 56 million value for the brands.
The sources added that emerging deal between the parties includes a buy me buy you pricing process in the future for the purchase of the remaining shares by one of the parties. This clause will enable Gottex Brands to eventually acquire complete ownership of the chains and brands.
NIS 1.1 billion in sales
Gottex Brands, usually referred to as Zara Israel Group, is one of the two largest fashion groups in Israel. Owned by Joey Schwebel and Chanan Elituv, the company finished 2013 with an estimated NIS 1.1 billion sales turnover. The group owns the Zara (23 branches), Pull and Bear (25 branches), Bershka (seven branches), and Massimo Dutti (two branches) chains. The group also has franchises for two Nike stores in Israel and Nike overseas stores.
For Gottex Brands, currently also in negotiations for opening stories of the Old Navy US brand in Israel, the deal represents an additional direction for expansion and its third agreement with an international fashion chain. Today, most of the group's business is with brands belonging to the Spanish Inditex group, which owns the Zara, Pull and Bear, Massimo Dutti, and Bershka brands, and with the Gap group, which owns the Gap and Old Navy brands.
Owned by Haim Sakal, Sakal Holding operates 32 branches in seven fashion chains of prestigious brands. Besides the Arcadia group brands, the group operates the A&F Brand Store Factory (six branches), the Quicksilver chain (five branches), and one branch of the O'Neal brand.
Sakal Holdings lost its franchise for the Tommy Hilfiger brand, which accounted for half of its revenue, to the Al Sard Group last year.
No response from Gottex Brands or Sakal Holdings had been obtained as of web posting.
Published by Globes [online], Israel business news - www.globes-online.com - on July 6, 2014
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