Bendon Group, which has the global distribution rights for Elle Macpherson Intimates and Stella McCartney underwear, put up A$2 million ($2.5 million) to kick off a 2011 merger with Australian rival Pleasure State in a deal that shrank millionaire Eric Watson's stake in the company.

Bendon's Australian unit made the deposit on Pleasure State in the 12 months ended June 30, 2011, before acquiring its rival on August 12, shows the financial report lodged with the Australian Companies Register. The full price paid hasn't been disclosed.

Watson's Cullen group ceased to be Bendon's sole shareholder in the merger and was replaced by Australian-domiciled JADR Holdings, according to the Companies Office. At the time, the deal was heralded as leaving Watson with an unclear, but "significant beneficial interest" in Bendon.

Cullen bought the underwear-maker in 2002 for $1.90 a share, valuing Bendon at $58.7 million. Watson also stepped back from having a role in its strategic direction as he and lieutenants Mark Flay and Don Stanaway stepped down from the merged underwear-maker's board.


They were replaced by the Pleasure State founder and boss of the merged entity, Justin Davis-Rice, and former Myer chairman Bill Wavish, who this year joined the board of Watson's Warriors rugby league team.

In November, Bendon said it centralised finance, IT, supply chain, demand planning and corporate functions at its Auckland head office, while design and merchandising is handled out of Sydney.

Bendon has 18 retail stores in Australia and 34 across New Zealand, according to its website.

Two months after the merger, Bendon snapped up three brands from ASX-listed Gazal at a discounted price.

Neither the Pleasure State nor the Gazal acquisitions' fair value of assets and liabilities was prepared in time for the 2011 statements.

Bendon's Australian unit made a loss of almost A$27,000 in the 12 months ended June 30, 2011, compared with a profit of A$1.3 million in the 15 months to June 2010. The company changed its balance date after the merger.

Sales of A$34.5 million in the 2011 financial year compare with A$50 million in the prior 15-month period.

Still, the 2011 financial year's operating activities were cashflow positive, with A$2.1 million coming in the door, compared with an operational outflow of about A$163,000 in the prior 15-month period.


The Australian unit's gross assets were valued at A$15.2 million as at June 30 last year. At the end of the balance date, the Australian business employed 202 staff, out of a global workforce of about 600.