Woolies sells Dick Smith for a bargain

WOOLWORTHS is selling the electronics chain Dick Smith to the private equity group Anchorage Capital Partners for a bargain price of $20 million, ending an eight-month search for a buyer.

Under the terms of the deal, expected to close late this year, Sydney-based Anchorage will buy 100 per cent of the business, which employs 4500 staff and runs 325 stores.

The retailer has closed about 60 of its 386 stores since the beginning of this year.

The City Index analyst Peter Esho said Woolworths had given up hoping for a better price.

''This is a fire sale,'' he said. ''It's an admission Woolworths can't do any better and they just want to put it behind them.

''Woolworths is really digging into the home improvement space and that really is the main priority now in terms of growth.''

The Perpetual retail equities analyst Maryanne Drewe said the price tag reflected the risks surrounding the chain, particularly in the area of leases for the stores.

Any buyer would be ''taking on a lot of liability in a difficult market segment,'' she said.

While sales at Dick Smith had been ''reasonable,'' the liabilities related to the company's large and varied retail network made it less attractive, Ms Drewe said.

Woolworths announced plans to spin off the chain in February, with analysts speculating that some of the brand's stores would be closed.

The electronics retailing industry has come under strain in Australia in recent years as consumers increasingly compare prices and shop online for computers, cameras and other equipment. JB Hi-Fi posted a profit plunge this year.

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