August 2, 2019 / 6:59 AM / 2 months ago

UPDATE 2-Majestic Wine sells units to Softbank's Fortress in online push

* Fortress to buy retail and commercial units for 100 mln pounds

* Rebranded company Naked Wines to focus on online sales

* Shares rise as much as 6% (Adds details, analyst comment, executive comment, shares)

By Tanishaa Nadkar and Pushkala Aripaka

Aug 2 (Reuters) - Majestic Wine will sell its retail and commercial units to Softbank Group’s Fortress Investment for about 100 million pounds ($121.06 million) as it looks to rebrand into a purely online retailer under the Naked Wines name.

The British wine merchant said on Friday it will sell the businesses to CF Bacchus Holdings Ltd, a vehicle controlled by funds managed by U.S.-based Fortress.

Majestic has been struggling with competition from discounters, with its high street stores hit by online rivals, and earlier this year faced the abrupt departure of its chairman.

It has been looking to sell businesses to focus on booming Naked Wines, which has doubled in size since Majestic bought it in 2015.

Shares in the AIM-listed company rose as much as 6% after it also said it had received “significant interest” from multiple bidders for the sale of its specialist fine wine unit Lay and Wheeler.

“I am delighted that we have managed to secure an independent future for both Naked and Majestic Retail and Commercial, allowing both companies to pursue growth,” Chief Executive Rowan Gormley said in a statement.

Britain’s traditional store groups have been facing challenges from rising property taxes and sluggish consumer spending. Many high street retailers have been forced to close stores and focus on boosting their online presence instead.

“This arrangement allows Naked to focus on its own growth, whilst protecting a still much-loved brand,” Nick Carroll, associate director of retail at Mintel said.

Majestic, which opened its first store in 1980, has also been trying to grow its footprint outside Britain ahead of Brexit.

Online sales currently account for about 45% of its business, with about 20% coming from its international operations.

Britain's wine and spirit industry contributes around 50 billion pounds to the country's economic activity, according here to the Wine and Spirit Trade Association, with around 60% of British adults drinking wine in 2016.

Majestic’s sixth-largest shareholder Gatemore Capital Management said it was “excited for the company’s prospects going forward as a standalone, high-growth and profitable business”.

The firm holds a 3.77% stake in the company, according to Refinitiv Eikon data.

The portfolio being sold to Fortress has around 200 retail shops, while the commercial unit supplies wine to businesses. The total consideration is 95 million pounds, with a separate property sale expected to realise a further 5 million pounds.

Majestic, which suspended its dividend earlier this year, said it will use the net proceeds from the sale to cut debt, invest in its Naked Wines business and return 3.8 million pounds to shareholders.

“This deal highlights significant shareholder value for current holders, but such with all things from this management team, they giveth with one-hand and taketh with the other,” Liberum analysts said.

$1 = 0.8260 pounds Reporting by Tanishaa Nadkar, Pushkala Aripaka and Noor Zainab Hussain in Bengaluru; Editing by Anil D'Silva and Jan Harvey

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