Clinton Cards agrees takeover of Birthdays
Clinton Cards agreed its biggest acquisition today, with a £46.4m (€66.1m) takeover of the Birthdays chain.
The deal boosts its presence in town centres by adding 500 stores to its existing portfolio of 805 outlets and concessions nationwide, while swelling its turnover to £500m (€712.3m) a year.
Clinton said it wanted to capitalise on the strength of the Birthdays brand and promised to trade the businesses separately on the high street.
Introducing its business model and cost controls would herald “significant opportunities” for improving Birthdays’ performance, the group added.
Birthdays fell £14.2m (€20.2m) into the red in 2003 after old stock, fixtures and fittings were written off, while this year’s figures will include £720,000 (€1m) of redundancy costs.
Clinton, which has 6,500 staff, said savings could be made from merging the head office of Birthdays at Bury, Greater Manchester, with its base at Loughton, Essex, but this was not expected to lead to “material redundancies”.
Birthdays has 167 non-shop floor staff and 3,300 people working in its stores.
Further costs could be stripped from the business from better management of the supply chain and the disposal of some stores.
Birthdays, which was founded in 1979, sells greetings cards and gifts from high-street locations in Ireland and the UK.
Many of its stores also sell discounted products via Cards Direct and birthday celebration essentials through a string of Partyland franchises.
Private equity owners West Coast Capital have recently overseen an expansion of the Birthdays brand into out-of-town retail parks as a way to maintain sales growth.
Turnover of £144.7m (€206.1m) was generated by Birthdays in 2003 to keep up its positive growth record of the previous two years.
Clinton chairman Don Lewin said: “This acquisition represents a significant step in our strategy, enabling us to create a much enlarged group in the UK market.”
The deal, which needs the approval of investors at a meeting in December, is expected to enhance earnings in the second full year of ownership by Clinton.
Clinton reported turnover of £394.4m (€561.7m) in the 12 months to the start of February, and annual profits of £29.5m (€42m).
Analysts said the deal was unlikely to hit any competition hurdles as the combined group will only have about 21% of the market in greetings cards.
Rhys Williams, of brokers Seymour Pierce, said: “This should be a very profitable acquisition for Clinton Cards in the long-run.”
Shares in Clinton rose 2p to 90p following the announcement.
