Majestic sale clears shareholder hurdle

The sale of  UK specialist retailer Majestic Wine to the US investment firm Fortress cleared another hurdle on Friday after shareholders voted in favour of the sale.

Shareholders voted 99% in favour of the sale and also approved a special resolution for the Board’ to purchase its own ordinary shares of 7.5p each.

The sale of Majestic’s retail and commercial business, Wine Warehouses Limited and its French division, Les Celliers de Calais, to CF Bacchus Holdings Limited, (also known as BidCo), a vehicle of the US investment firm for £95 million was announced at the start of August, with Majestic’s Ealing store beind sold separately to propery developer A2Dominion for around £5 million. If planning permission is granted, the site will be redeveloped as a 25 storey residential block of flats and retail space on the ground floor, with Majestic having the option to have a store.

Fortress is owned by Japanese bank, SoftBank.

Major shareholders of the business, which was officially renamed Naked Wines plc last month, include members of the Apthorp family, who founded Majestic in 1980 and retained a 14.3% share of capital as at 21 August 2009, Texas-based private investment firm Acacia Partners (9.64%), American-owned global asset management firm T Rowe Price International (6.66%),  Naked Wines CEO Rowan Gormley, who has a share of 6.05% of the issued share capital, global asset manager Aberdeen Standard Investments (Standard Life), CLS Investments, investment firm Gatemore Capital Management, which started quietly accruing shares in Majestic in the first quarter of this year, and Shareholder Value Management.

However, speaking on BBCRadio5 Live’s Wake up to Money programme on Friday alongside db, before the shareholder vote, investment expert Will Walker-Arnott, senior investment manager at Charles Stanley & Co, said there was some nervousness in the City about Naked Wine’s “unproven model” as well as its decision to stall the final dividend for the financial year while the sale was ongoing.

Naked Wines has already said that once the sale is completed it will pay a special dividend in line with the previous announced dividend, however Walker-Arnott said investors did not like uncertainty and gaps in the normal income flow.

“They are also slightly nervous about the amount of money that Naked has had to spend to acquire customers through digital advertising and at the moment the overall company is loss-making and announced a £8.5m  loss this year, compared to a £8m profit last year. So it’s an unproven model and the gap in dividends makes investors nervous,” he told the programme.

He added that while there was the potential for exponential growth online, the cost in acquiring customers was of concern to investors, while the crowdfunding element of the business added “an added layer of complexity” that was viewed skeptically.

According to unconfirmed reports on Sky News last month, the company is seeking final bids for its fine wine business Lay & Wheeler which is being sold separately. Sky said the fine wine division has attracted a number of firm offers primarily from Private Equity, but that  Michael Spencer, chairman and part-owner of BI Wines & Spirits, as also interested. The sale is expected to raise around £10 million, it added.

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