Majestic Wine has reached a deal to sell its retail chain and commercial business to the Fortress Investment Group as part a planned restructuring to refocus its operations around its fast-growing online unit.
CF Bacchus Holdings (BidCo), a vehicle controlled by the US-based investment firm, is paying £95m for the 200-strong Majestic Wine store estate and commercial division that supplies wine to businesses. A separate deal to sell a freehold property in Ealing to a property developer is expected to raise a further £5m.
Majestic also confirmed reports from earlier this week that it is exploring the sale of its Lay & Wheeler fine wine merchant, with it stating it had received “significant interest” from multiple bidders.
In the face tough competition from the supermarkets and online rivals, Majestic outlined earlier this year that it planned to sell its retail chain in order to focus on its fast-growing subscription-based online operation, Naked Wines. It bought the British business in 2015 and has since more than doubled its size with its fastest growing market now being the US.
Majestic stated that it will use the proceeds from the sale to reduce debt and invest in growing its Naked Wines business, which generated revenues of £178m last year. It will also return £3.8m to shareholders through a special dividend.
The company highlighted that the move would free up capital and resource to pursue the “significant growth opportunity ahead of Naked”.
Rowan Gormley, CEO of Majestic, commented: “I am delighted that we have managed to secure an independent future for both Naked and Majestic Retail and Commercial, allowing both companies to pursue growth by focusing on their unique propositions.”
BidCo has yet to confirm its longer term plans for the Majestic estate, which generated sales of over £300m last year. Contrary to recent reports, former Berry Bros & Rudd CEO and Tesco drinks head Dan Jago is not expected to take on a role running the business despite holding talks with Fortress.
The deal is conditional on the approval of Majestic’s shareholders and regulatory clearance but is expected to be completed in the fourth quarter of this year.
