Mainboard-listed The Hour Glass has proposed to acquire A.C.N. 685 541 851 Pty Ltd (SPV), a watch retailer, for A$90 million ($75.6 million).
The company, through its Australian subsidiary, entered into a share purchase agreement (SPA) to acquire the newly-incorporated SPV.
According to The Hour Glass, the acquisition is in line with its strategy to continue expanding its presence in Australia and to strengthen its retail footprint. The acquisition is expected to provide The Hour Glass’ Australian subsidiary with an enlarged client base and “operating synergies”.
Under the SPA, the shareholders of SPV will undertake a restructuring where they will transfer certain dealership rights, leases in prime locations and inventories to the SPV.
On a pro forma basis, had the acquisition been completed on March 31, 2024, The Hour Glass’ net tangible assets (NTA) would have fallen to $1.18 from $1.30 originally. Had the acquisition been completed on April 1, 2023, The Hour Glass’ earnings per share (EPS), would have, however, risen to 25.21 cents from 23.87 cents originally.
The purchase consideration will be paid by internal resources and bank borrowings. It is expected to be completed in the first half of The Hour Glass’ financial year ending March 31, 2026. The completion of the SPA is conditional on the restructuring, satisfactory due diligence results and a complete release by any lenders of the vendors group of security over the business. SPV will become a wholly-owned subsidiary of The Hour Glass’s Australian subsidiary after the completion of the acquisition.
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As at 9.09am, shares in The Hour Glass are trading flat at $1.55.
