By Sarah Falson
BOTANY: HWI Electrical’s poorly-performing non-electrical homewares division has been sold to HWI shareholder, Playcorp Group of Companies, after two months on the market and an unexpected knock-back from bidder, McPherson’s.
“HWI is pleased to announce that agreements have now been entered into for the disposal of its Australian Homewares Division,” said a notice from the company, which will now focus solely on its key small appliance brand, Breville.
Playcorp is headed-up by Steven Lew, the son of major Housewares shareholder Solomon Lew who owns 27 per cent of the business, meaning a panel of remaining Housewares shareholders will need to offer final approval of the sale at a meeting in early May.
The remaining HWI business will now make for a more attractive takeover target, and “a number of parties” have indicated that they are interested in making an offer for the company, according to HWI company secretary, Paul Milburn.
Ealier this month, Harbinger Capital Partners, whose US parent-company Harbert Management Corp is known for its buying prowess, tightened its grip on HWI to 11 per cent from 9.79 per cent, driving rumours that it planned to buy the wholesaler.
Sunbeam’s parent-company, GUD Holdings, is also rumoured to be interested in purchasing HWI so it can get its hands on competitor, Breville, however GUD managing director Ian Campbell told Current.com.au in February that it was “only a rumour” and nothing more.
Various sources have speculated that GUD would do well to purchase HWI as it would allow the former to enter the US market in which Breville has for four months been trading through high-end Williams-Sonoma stores.
The sold Homewares division, which is responsible for Baccarat, Arcosteel and Alex Liddy-branded tabletop and kitchen products, is worth $24 million which includes receipts from the two purchasers and debtors, along with payments to creditors and other transaction costs.
If the division had been sold to kitchen-company, McPherson’s, as originally anticipated before it dropped out of the purchase when HWI announced the unit had lost $6.1 million in the half-year ending 31 December 2006, HWI would have received $1 million more for the sale.
The ailing Homewares division contributed to the $29.1 million loss that HWI experienced in the same period.
The $24 million that HWI will receive for its Homewares unit also includes a $1 million deposit for its Sabco brushware and cleaning business, from an unrevealed buyer. A formal Sale Agreement for the Sabco business will be announced before the end of this month.