A number of Australian companies have been approached about acquiring The Jewellery Group, which comprises 101 Zamels and 26 Mazzuchellis stores. While local companies have received offers, Jeweller has learned from highly-placed industry sources that the current frontrunner for the sale is based overseas.
While an acquisition appears to be on the cards, its current owners are unlikely to be pleased about the asking price. Sydney private-equity firm Quadrant announced in 2006 that it was acquiring the Adelaide-based jewellery retailer.
Estimates of the sale price ranged from $75 million to $100 million however, when the takeover was completed in March 2007, industry sources suggested the amount was closer to $48 million.
In a stunning depreciation, Quadrant is tipped to be offloading the group for less than $20 million - a loss of around $30 million in just over four years
The firm has over $1.5 billion under management specifically dedicated for investing in private equity, with stakes in over 47 businesses.
Managing director of The Jewellery Group Adrian Murphy would not confirm that the sale was imminent, and declined to comment whether Zamels was up for sale.
Accounting firm Deloitte’s is believed to be handling the sale but when approached, director of corporate finance, Alex Lupel also refused to comment - adding that he would not verify that Zamels was being sold. Nor would he confirm if the sale to an overseas business was about to happen.
Local players keen for a bargain have also expressed interest in Jewellery Group assets after being approached by Quadrant. Adelaide-based Transworld Enterprises, which operates 31 Shiels and eight Grahams stores in South Australia and Western Australia, was reportedly considering a buy-out before the sale in 2007 and has confirmed he was again approached about The Jewellery Group.
“I’ll buy anything at the right price,” said Transworld managing director Albert Bensimon, although at this stage, no deal has eventuated.
A senior industry source, who asked not to be identified, told Jeweller, “It was common knowledge that a number of people had looked at it [buying Zamels] and I’m not sure if they’ll [Quadrant] be successful at selling it.”
Two New Zealand based companies currently dominate the Australian jewellery chain store market, with Michael Hill boasting 148 stores and James Pascoe - over 420 Prouds, Goldmark and Angus & Coote stores. Neither are believed to be the international company behind the sale.
Michael Hill managing director Mike Parsell declined to comment, and wouldn’t confirm that his company had been approached by Quadrant or Delloitte about the sale.
Likewise, Andrew Nock general manager at Angus & Coote would not comment whether James Pascoe had been approached about acquiring its smaller rival.
A deal between James Pascoe and The Jewellery Group was less likely. Industry sources advised such a deal would make little sense given the number of stores in the same shopping centres.
Any deal between James Pascoe and The Jewellery Group could potentially run afoul of the Australian Competition and Consumer Council (ACCC) for anti-competitive concerns.
If, as industry sources insist, as of late yesterday, the two New Zealand companies were indeed out of the running, the possibility of a sale to an Asian operator looking to expand into Australia is even more likely.
A second person familiar with the matter suggested that the potential international buyer could be a Zamels’ supplier considering the acquisition to either shore up debt, or even establish a vertical operation from manufacture to retail.
Watchmaker Phillip Zamel opened the first Zamels store in NSW in 1954 and the first South Australian store opened at Elizabeth in 1960. Phillip’s sons, Adrian and Stephen trained as manufacturing jewellers and joined the business.
Associates close to the Zamel family also point out that the five year non-compete clauses signed by Adrian and Stephen Zamel will soon end, though it’s most unlikely they will “do a Kerry Packer” and buy the business back.