Fawaz Abdulaziz Alhokair Co. Announces the Acquisition of an E-Commerce Platform in the value of SAR 68.9 Million

Element ListExplanation
Introduction Fawaz Abdulaziz Alhokair & Co. (“Alhokair” or “the Company”) announces the signing of a share purchase agreement (“the Agreement or “the SPA”) on Tuesday 18 Rajab 1442H corresponding to 02 March 2021 to purchase (25.5%) of the share capital of Vogacloset Limited (“the Target”).
Transaction Details Alhokair announces the signing of an SPA on Tuesday 18 Rajab 1442H corresponding to 02 March 2021 to purchase (39,253) ordinary shares in the Target, which represents (25.5%) of its share capital post capital increase pursuant to the Agreement.

Vogacloset Limited is the owner and operator of the online platform

The Target will continue to be independently run and managed by its founding executive and management team, including the Chief Executive Officer, Chief Operations Officer and Chairman. The Target will continue to manage and operate its online e-commerce platform

This transaction gives the Company access to a leading international e-commerce platform, with strong presence and recognition in the Middle East and Saudi Arabia to put forward its brands and be closer to its customers.

The Company confirms that there are no related parties in this acquisition from the sellers of the Target, other than the other buyers of the Target’s shares.

As part of the Agreement, it is also noted that Arabian Centres Company, a Saudi publicly listed company, would also be acquiring 39,253 ordinary shares in the Target through a mix of capital increase and share acquisition which, combined, represents (25.5%) of the share capital post capital increase pursuant to the Agreement.

Transaction Value SAR 68,856,933
Transaction Terms The Agreement include typical warranties and undertakings by the Sellers in similar transactions.

The Agreement further provides for the selling and continuing shareholders including the Executives of the Target to receive earn-out incentives based on the valuation of their shares held over the next three financial years post completion of this transaction. The earn-out provisions are based on certain underlying requirements agreed upon in the Agreement being met in terms of business performance, with a cap on earn-outs in all cases.

The Company through the Agreement will own 25.5% of the Target’s share capital and will hold two seats on its Board.

Further, the Company and the Target shareholders have in place a put and call option agreement starting three years from the Transaction date on the Target shareholders’ remaining shares pursuant to the normal provisions in similar transactions as stipulated in the Agreement.

In addition, the Agreement grants the right to the Company to assign the benefit of the Agreement to any member of its group.

Parties of the Transaction 1) Fawaz Abdulaziz Alhokair & Co (“Buyer”)

2) Arabian Centres Company (“Buyer”)

3) Vogacloset Shareholders (“Sellers”)

Transaction Funding Method The purchase price will be paid in cash to the Target owners upon completion of the process of signing the amended article of association as per the regulations. The transaction will be funded through the Company’s internal resources.
Transaction Execution Date 2021-03-02 Corresponding to 1442-07-18
Description of the Business of the Asset forming the Subject Matter of the Transaction Vogacloset Limited is a UK-based online fashion platform that operates, offering the latest women’s, men’s and kids’ trends to consumers in the Middle East.
Financial Statements for the Last Three Years of the Asset forming the Subject Matter of the Transaction Revenue:

2018: USD 42 million (SAR158 Mn)

2019: USD 47 million (SAR 178 Mn)

2020: USD 71 million (SAR 266 Mn)

Net income (Loss):

2018: USD (0.06) million (SAR (0.24) Mn).

2019: USD (0.21) million (SAR (0.79) Mn).

2020: USD 2.92 million (SAR 10.94Mn).

Transaction reasons Alhokair’s investment in Vogacloset Limited will greatly accelerate the Company’s digital programme and its transitioning into a lifestyle retailer of choice.

Alhokair will leverage on Vogacloset’s customer-centric ecosystem by directly integrating its product offering on Vogacloset’s platform thus further bolstering its online presence and creating an omnichannel experience for its customers.

Integration of a business already delivering profitable growth in the digital space is expected to have a positive impact on AlHokair’s consolidated financial performance.

In addition, the e-commerce platform is ready to launch AlHokair’s brands online, leveraging Vogacloset’s customer-centric ecosystem and complementing the combined brand portfolios. This will expand AlHokair’s online presence and create a genuinely omnichannel experience for its Saudi customers.

Expected Impact of the Transaction on the Company and Its Operations There is no direct impact on the Company’s liabilities. However, the Company expects to see the positive financial effect of the transaction from Q1 FY2022 onwards in terms of profit sharing, and also an increase in the sales of its brands and offering on the platform once the necessary arrangements and agreements are completed post completion of the acquisition.
Related Parties None other than the co-buyers.
Additional Information The signing of this agreement does not mean that the transaction is closed, since the closing is subject to the completion of the commitments outlined in the Disclosure letter.

Fawaz Abdulaziz Alhokair & Co. will announce closing the transaction or any material update in due time.

Attached Documents  

The Capital Market Authority and the Saudi Stock Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.

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