Receivers of collapsed consumer electronics retailer Dick Smith are hoping to attract interest from cashed-up Asian buyers in an attempt to maximise returns to creditors owed $400 million.
Ferrier Hodgson has advertised the sale of Dick Smith in Asian newspapers, including the Asian Wall Street Journal, in a bid to lure major consumer electronics retailers such as Gome, Suning and Yamada and electronics suppliers seeking to establish a retail footprint in Australia.
“We don’t want to leave any stone unturned,” said Ferrier Hodgson retail partner James Stewart, who took control of Dick Smith’s 393 stores at the behest of lenders on January 5 after the company appointed McGrathNicol administrators.
“Most of the world’s consumer electronics retailers are supplied through Asian markets. We want to make sure we give everyone an opportunity,” Mr Stewart said.
Ferrier Hodgson has received at last 50 expressions of interest for Dick Smith’s assets and more offers are likely before the deadline for non-binding expressions of interest closes on Wednesday.
Many of the offers are from “tyre kickers” and buyers interested in parts of the business, such as fash-tronics chain Move, the New Zealand operations and individual store leases.
However, industry sources believe that the sale of Dick Smith at a bargain basement price may lure major Asian consumer electronics retailers who do not yet have a bricks and mortar presence or distribution network in Australia.
Presence in Australia a draw
A Deloitte report released early this year found 39 of the world’s top 250 retailers now operate in Australia, including Apple, Aldi and Costco Wholesale. But 84 per cent have no presence in Australia.
Not one of the world’s four largest consumer electronics retailers, Best Buy of the US, Suning and Gome of China, Yamada of Japan and Dixon’s of the UK, has retail stores in Australia.
Deloitte’s national retail leader, David White, says it is becoming more difficult for overseas retailers to establish a presence in Australia organically because of increased competition, the lack of suitable store sites and time constraints. These structural issues may make it more attractive for global retailers to buy existing businesses.
Mr Stewart believes the weaker Australian dollar may also make Australian retailers – Dick Smith in particular – more attractive to Asian buyers.
“Most of the Chinese retailers haven’t come to Australia yet. Now there’s an opportunity to do that, particularly as the currency is not as strong as it used to be,” he said.
Ferrier Hodgson has commenced discussions with a core group of serious buyers and will draw up a formal short list after the offer deadline closes this week.
The receivers have issued a 15 page “teaser” document, which sets out historical sales data, store locations and the range of offers sought, and a detailed 70-page information memorandum to selected parties.
Mr Stewart welcomed the decision by the administrator, McGrathNicol, to seek to postpone the second meeting of Dick Smith’s creditors until August, saying it would give the receivers more time to complete asset sales and liaise with landlords.
This article first appeared on SMH BusinessDay. Follow them on Facebook.
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