Comet sold for... £2 with £50 million sweetner paid to the new buyer to get rid of!

worldtraveller

It sounds like Sale of the Century: 248 shops packed to the rafters with flatscreen TVs, fridges and laptops for just £2. But this isn't a TV gameshow staring Nicholas Parsons, it is the sell-off of struggling high street electricals retailer Comet.

It may sound like a great deal but even at £2 the price was too dear to attract any buyers, forcing Comet's owner, Kesa Electricals to hand over a £50m lump sum, on top of the stores and the stock, to encourage private equity firm OpCapita to take the 78-year-old chain off its hands.

"[We're paying] £50m to get rid of Comet," Thierry Falque-Pierrotin, the French boss of Kesa, explained.

The Guardian

A._Badger

worldtraveller wrote: »

It sounds like Sale of the Century: 248 shops packed to the rafters with flatscreen TVs, fridges and laptops for just £2. But this isn't a TV gameshow staring Nicholas Parsons, it is the sell-off of struggling high street electricals retailer Comet.

It may sound like a great deal but even at £2 the price was too dear to attract any buyers, forcing Comet's owner, Kesa Electricals to hand over a £50m lump sum, on top of the stores and the stock, to encourage private equity firm OpCapita to take the 78-year-old chain off its hands.

"[We're paying] £50m to get rid of Comet," Thierry Falque-Pierrotin, the French boss of Kesa, explained.

The Guardian

I hope the new owners don't try to take it back under warranty. The worst attitude to faults of any store I have ever dealt with. Good riddance to them!

michaels

I guess the bestbuy closure allowed them to get rid of it for only 50 million...

Thrugelmir

Sweetner? The new owners will potentially have to to fund a £40 million pension scheme deficit.

vivatifosi

Thrugelmir wrote: »

Sweetner? The new owners will potentially have to to fund a £40 million pension scheme deficit.

Quite. Whenever there's a headline screaming how a company being sold for just one or two pounds, there's always some very scary numbers worthy of several of these:eek::eek::eek::eek::eek::eek: behind the scenes.

Let's hope they can turn it round. I wonder what OpCapita see in it (if it's a close it down, liquidise the assets and make a £10m profit why didn't the previous owners do it and make slightly lower losses).

Mallotum_X

Other than the stock, does Comet own anything, trying to work out how a VC group can strip any money out of this, unless they have some complicated plan to dump the pension/warranty liabilities and move on.

The big box style of retail for electricals hasnt really been working very well for a few years, Dixons Group seems to limp from one problem to the next, although they seem to be working on cutting rents (either through the rent a shop for a quid type deals or combining Currys and PC World's under one roof in various locations).

Will Comet really still be here in a few years time, I doubt it.

Graham_Devon

They could have saved a few bob by not switching on all those hair dryers in the advert!

Generali

vivatifosi wrote: »

Quite. Whenever there's a headline screaming how a company being sold for just one or two pounds, there's always some very scary numbers worthy of several of these:eek::eek::eek::eek::eek::eek: behind the scenes.

Let's hope they can turn it round. I wonder what OpCapita see in it (if it's a close it down, liquidise the assets and make a £10m profit why didn't the previous owners do it and make slightly lower losses).

Comet comes with a thumping great big liability in the shape of leases. Dixons is heading the same way.

These guys are like blacksmiths, fletchers or fullers. Their race is run. Why would you buy a TV from a shop like Comet or Curry's? They're only interested in selling you credit and an 'extended guarantee'. If the product is any good, why insure it? If the product is crap why buy it?

If you want a cheap TV go to Tescos or eBay (or Freecycle where I used to get my TVs). If you want an expensive one go to your local store where they are interested in what they sell and will genuinely help you out.

Mallotum_X

Generali wrote: »

Comet comes with a thumping great big liability in the shape of leases. Dixons is heading the same way.

Dixons do seem to be shaping up to have a plan.

Locally to me there is a Currys and PC World within 250m of each other. Currently there is a planning application in to add a mezzanine floor into the Currys to add a PC world upstairs, and a lengthy planning battle to allow the PC world to be converted into a supermarket.

I have read in the past that this was a plan elsewhere to put the two shops under one roof, although as a plan it only works if you can sublet a store or so a deal to end the lease.

Where leases have been ending Dixons Group have been one of the stores doing deals to keep renting but on a peppercorn rent + keep paying the rates bill. Landlord avoids an empty shop and a rates liability, Dixons keeps a high street presence with minimal costs.

Dixons looks more likely to survive that Comet, but with the likes of Amazon selling everything they do we shall have to wait and see.

Generali

Mallotum_X wrote: »

Dixons do seem to be shaping up to have a plan.

Locally to me there is a Currys and PC World within 250m of each other. Currently there is a planning application in to add a mezzanine floor into the Currys to add a PC world upstairs, and a lengthy planning battle to allow the PC world to be converted into a supermarket.

I have read in the past that this was a plan elsewhere to put the two shops under one roof, although as a plan it only works if you can sublet a store or so a deal to end the lease.

Where leases have been ending Dixons Group have been one of the stores doing deals to keep renting but on a peppercorn rent + keep paying the rates bill. Landlord avoids an empty shop and a rates liability, Dixons keeps a high street presence with minimal costs.

Dixons looks more likely to survive that Comet, but with the likes of Amazon selling everything they do we shall have to wait and see.

Lots of good and interesting points Mallotum X but to be honest, I think all DSG (Dixons) can do is buy time. A shop can't really tell you how good or bad a fridge or a washing machine is so it's hard to see what value they add.

At least a clothes shop lets you try the clothes on and a record/games/book shop might be fun to hang out in.

My best guess is that the High St is going to stratify into 'retail experiences' where you'll pay the premium for enjoying what's happening to you and then big box supermarkets.

Really2

Investing £50m in the holding company suggests they are still holding a large stake in the company in reality.

That is confirmed by.

Kesa added it would benefit from any subsequent onward sale of the chain.
However, it would only do so if the resale price were greater than £70m

That matches the £30M of Private equity funding and a £40M loan facility.

So looks like Private equity and bank get paid back first on a sale.