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Fisher & Paykel Appliances and jewellery retailers Pascoe have signed an agreement to purchase the Farmers Ltd businesses for a total of $311 million.



James Pascoe Ltd will purchase Farmers Holdings Limited, the ultimate holding company for the Farmers Group, and retain the Farmers retail chain.



F&P Appliances will pay $188.7 million for the Farmers finance and credit card business, which has over 500,000 customer accounts including 350,000 which own a Farmers store card.

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The finance business generates annual pre-tax earnings of up to $28 million, three times the earnings of F&P Appliances' own finance company Fisher & Paykel Finance.



The Farmers group is New Zealand's only nationwide department store chain, and has been up for sale by Australian-based owner, Foodland Associated, for some time.



Foodland said last month it had withdrawn the 64-store Farmers from sale because it had been unable to agree the final terms.



Several interested parties had previously withdrawn from the bidding because the $300 million-plus price tag was considered too expensive.



Several parties interested in buying Farmers -- Macquarie Bank and GS Private Equity, and Eric Watson's Pacific Retail Group -- withdrew from the bidding in July.



F&P had been speculated as a contender because it was interested in the highly profitable finance arm.



The acquisition will be undertaken by Hector Paskel Limited, a subsidiary of privately-owned James Pascoe Ltd.



"The sale and purchase is subject to normal preconditions including the consent of some landlords and confirmation of financing of the transaction," F&P Appliances managing director Alastair Macfarlane said in a statement.



Settlement is scheduled for late October.



F&P Appliances has entered into a long-term 20 year arrangement with Pascoes to supply financial services to the retail business on an exclusive basis, including exclusivity of the Farmers credit card.



"This acquisition provides us with the opportunity to merge our existing Fisher & Paykel Finance business with Farmers Finance to form a leading retail consumer finance company in New Zealand," Mr Macfarlane said.



"Significant benefits from synergies, increased efficiencies, and new initiatives involving the Farmers Card will result from this acquisition over the medium to long term."



The Farmers Finance business is financed from the issue of commercial paper and medium term notes pursuant to a $600 million asset backed capital market programme.



F&P Appliances shares last traded up 5c at $14.85.



- NZPA