News of Truworths on the acquisition trail again sends its shares higher

Yesterday, Truworths International announced that it was looking into the potential acquisition of a UK shoe retailer.

Shares in the company soared higher on the news.

If this acquisition goes through it would add to two others the company made earlier in the year.

Let's take a closer look at the potential deal…

Truworths are in talks about buying Office

Early yesterday morning, Truworths [JSE:TRU] released a cautionary announcement detailing that it has “entered into preliminary non-binding negotiations” for a possible acquisition of a UK shoe retailer, reports Fin24. Office Retail Group currently has around 150 stores operating across the UK.

Office focuses on the sale of “fashion footwear” catering to women, men and children, adds Fin24. It stocks both “third party brands and its own brands”.

Truworths has not made any offer as it stands for Office or concluded “any transaction,” says IOL. The company states that “shareholders should be cautious when trading stock”.

Truworths currently operates through SA, Ghana, Botswana and Nigeria, reports BDLive. The majority of its “profits and sales” come from its domestic market, but South African consumers are facing rising living costs and prospects of rising interest rates.

It certainly appears the retailer is looking to diversify.

Truworths’ move follows in the footsteps of Foschini

This comes just eight months after its rival The Foschini Group bought UK retailer Phase Eight in January, notes MoneyWeb. This gives Foschini “access to European markets”.

A successful acquisition of Office would add to Truworths’ other acquisitions this year of Earthchild and Naartjie, says Fin24. And a UK business would help to offset the impact of a weakening rand.

During trading, shares rallied over 4%, notes BDLive. By market close, shares in Truworths were 3.85% higher at R89.58.

Time will tell if Truworths makes a binding offer for the UK shoe retailer.


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