Not much luck at the moment for high profile buy outs
Sep 15, 2014 at 9:53 am in General Trading by contrarianuk
John Caudwell the ex-Phones4U owner
Back in July the lingerie chain, La Senza, formerly owned by ex-Dragon’s den star Theo Paphitis filed for bankruptcy and today it was announced that mobile phone retailer Phones4U formerly owned by high profile entrepreneur John Caudwell has gone into administration. Both Paphitis and Caudwell did rather well before their former companies collapsed as a result of mismanagement, changing economic circumstances or bad luck.
La Senza was sold to private equity firm Lion Capital in 2006 for £100 million and first called in administrators in December 2011. Although it was rescued by a division of Kuwaiti retail group Alshaya (later called Marnixhealth), the buy out failed and the company went into administration a second time this year.
Phones 4U is owned by BC Partners and was forced to call in administrators after EE, followed Vodafone and O2 in withdrawing contracts allowing the retailer to sell phones using their mobile phone networks. BC partners bought the company for £600 million in 2011 but took a special dividend last year of £800 million last year, loading the company with debt. Caudwell originally sold the business in 2006 for £1.5 billion. Phones 4U produced over £1 billion in sales and had earnings before interest, tax, depreciation and amortisation of £105 million. With the special dividend, BC partners don’t have much to complain about despite the demise of the chain.
The latest failure shows how tough it is on the UK high street and how companies which rely on third party providers for their income can suddenly have the rug pulled from under them. Bad news for Phones4U but good news for Dixons Carphone which will likely reap some of the customers on the hunt for a new mobile phone.
Contrarian Investor UK
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