Australia-based Pacific Brands today said that it has entered into an agreement to sell its Workwear business to fellow Aussie company - Wesfarmers Industrial and Safety (WIS), a division of Wesfarmers Limited.
The sale has been done at gross proceeds of $180 million on a cash and debt free basis and is subject to approval from the Australian Competition and Consumer Commission (ACCC) and certain other consents and approvals.
In fiscal year 2013-14, the Workwear segment reported sales of Au $368.5 million and EBIT, before significant items of Au $22.1 million.
As of June 30, 2014, the carrying value of related net assets to be disposed was $140 million and subject to timing, costs of disposal and completion adjustments, Pacific Brands expects to receive a profit on sale of around Au $35 million in the fiscal year ending June 30, 2015.
Pacific Brands said an element of corporate and shared services costs estimated at around Au $3-4 million per annum allocated to Workwear will stay unrecovered, following full transition of the business.
It also added that the net proceeds from the transaction will be applied to reduce net debt.
Pacific Brands CEO said “The sale of Workwear simplifies and focuses Pacific Brands group strategy around maximising the potential of our market leading brands such as Bonds and Sheridan. It also reduces exposure to the challenging industrial market, and restores balance sheet strength to the company.
"We are continuing to consider other options to build shareholder value including further measured investment in retail, category expansion and international distribution, and exploring further options to simplify the business”, Mr Bortolussi said.
