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Brait -- cautionary relating to acquisition
Posted Fri, 09 Mar 2012

Further to the cautionary announcement dated 17th February 2012, shareholders are advised that the Company has entered into a transaction alongside the founder and senior management to acquire the entire issued share capital of Iceland. Brait invested GBP80 million to acquire a 19% stake ("the Acquisition"). Rationale Established in 1970 by Malcolm Walker and his business partner with just GBP60 of capital, Iceland now operates over 700 stores across the UK and reported year-end sales of GBP2.4bn to March 2011. The group, which consists of value food retailer Iceland Foods, discount frozen food retailer Cooltrade and frozen food exporter ITEX, continues to invest heavily in frozen food innovation, launching over 200 new products in the past year alone. Iceland’s business model centres on a frozen-led grocery proposition, supported by chilled and ambient (grocery) categories. The management team stresses that value, not price, is the key attraction to its customers, and whilst Iceland is most commonly synonymous with frozen foods, the overall offering is family orientated with a heavy focus on value for money. By leveraging its scale and private label offering in its core categories Iceland is able to offer customers consistently low prices. This acquisition presents Brait with an opportunity to partner an entrepreneurial management team in a successful business exposed to a strong performing segment of the market alongside international market leading retail investor groups. A more detailed overview of the business will be presented at the company's upcoming results presentation. Terms of the Acquisition The effective date of the Acquisition is 9 March 2012. This Acquisition values the business at GBP1.45 billion before transaction costs and is based on a sustainable historic EBITDA of GBP230 million, implying an entry multiple of 6.3x. The consideration The buyout is backed by a GBP860 million all-senior debt package funded by Credit Suisse, Deutsche Bank, HSBC, Nomura and RBS, as well as a GBP250 million vendor loan note. The equity funding has been provided by existing senior management acquiring 43%, with the remaining equity acquired in equal proportions by Brait, Lord Kirkham, founder of DFS Furniture Group, and The Landmark Group, a leading Middle Eastern retail group. Conditions precedent There are no conditions precedent to concluding the acquisition. Withdrawal of cautionary As all the material Acquisition information is contained herein, caution is no longer required to be exercised by shareholders when dealing in their Brait securities.