Photo-Me, the instant-service equipment group, is pleased to announce that it has agreed to buy Asda Stores Limited’s Photo Division which is operated in Asda stores in the UK.
The Photo Division consists of 191 photo centres, as well as 172 self-service kiosk sites located in Asda stores. These businesses will be managed by Photo-Me under a ten-year concession. Besides those in-store locations, Photo-Me will also operate the Asda-branded online photo-processing offering for a minimum of 2.5 years.
This transaction strategically expands Photo-Me’s estate in attractive locations offering convenience and high footfall, and enhances its online photo-processing offering. Photo-Me believes that it can increase its market share in the attractive digital photo-printing and consumer photo-merchandise markets. In addition, Photo-Me believes that under its management, the performance of the business could be significantly enhanced in the medium term.
The consideration for the Photo Division is £3.35 million, subject to downward adjustment in certain circumstances. Photo-Me has also agreed to buy the inventory available at each photo centre at the date of Completion, as well as central consignment stock, estimated at £2 million. The total consideration to be paid is currently estimated at £5.35 million and is capped at a maximum of £6 million.
Under the arrangements, Photo-Me will also pay Asda periodic commission payments, negotiated on commercial terms, based on the turnover, as well as business rates and costs of utilities.
In the calendar year 2015, the Photo Division generated unaudited sales of circa £19.3 million and made an unaudited loss of £3.4 million. The Group considers that the turnover can be raised materially by having a specialist like Photo-Me running the business, with its proven operational excellence and understanding of consumer needs in relation to instant services. The Group also expects that a combination of reconfiguration of layouts, upgrading of equipment, as well as the introduction of innovative concepts and designs into the sites will add to the appeal for customers and expand the profit performance going forward.
Commenting on the Acquisition, Serge Crasnianski, Chief Executive of Photo-Me, said:
“This is an interesting opportunity to significantly expand our UK business in a strong set of locations and increase our market share in the digital photo printing market, which we believe has growth potential in the digital age. Photo-Me is the leader in its field with a wide range of attractive and innovative products which we plan to introduce into the Asda stores as soon as possible, and we believe will improve the level of trading and overall performance over the next two years and beyond.”