Home > Latest News > EXCLUSIVE:Former Best Buy Company Makes Offer For Dick Smith Tipped To Be Accepted

EXCLUSIVE:Former Best Buy Company Makes Offer For Dick Smith Tipped To Be Accepted

EXCLUSIVE:Former Best Buy Company Makes Offer For Dick Smith Tipped To Be Accepted

The Five Star Chinese retail chain that was 75% owned by giant US consumer electronics retailer Best Buy has put in a none binding bid to buy Australian retailer Dick Smith, the offer is believed to have been accepted by the receiver Ferrier Hodgson who is waiting on acceptance by the banks who placed the mass retailer into administration.

According to sources two offers, one from Indian conglomerate Tata, and another from Shenzhen MTC were rejected with the Jiangsu Five Star Appliance Co., Ltd offer, the only remaining viable bid.
 
All of the Companies that have made offers are believed to have approached the receiver after the formal bid process closed in January. 
 
Five star was the only Company that put in what has been described as an “acceptable” offer. 
 
Currently Five Star has several senior Chinese executives in Australia running due diligence along with their Australian CFO, at this stage their intent is to buy all of the Dick smith stores in Australia and New Zealand as well as the Move stores in Australia insiders said.  
 
They then plan to close 45% of Dick Smith stores and any future stores will be “significantly larger” than current Dick Smith stores said a source. 
 
The Company which was 75% owned by Best Buy are currently concerned about the financials supplied by Ferrier Hodgson and want to conduct their own due diligence audits. 
 
ChannelNews has seen the financials that were supplied by Ferrier Hodgson.
 
Five Star have made suggestions that the Company places an upfront bond and takes over the running of the retailer for several weeks before making a final payment.
 
According to Dick Smith sources Five Star is believed to have approached several former managers in an effort to obtain and information while evaluating their possible employment in the new Company. 
 
On June 8, 2006, Best Buy acquired a 75% interest in Five Star for US$184M which included a working capital injection of $122M and transaction costs, they sold their share in the business in 2014.
 
What is not known at this stage is whether the stores will be branded Dick Smith, or Five Star.
 
ChannelNews has been told that Best Buy has researched the Australian market on “a number of occasions” in the past. 
 
Ben Cavender, a Shanghai-based analyst at China Market Research Group, said that when Best Buy decided to expand the Five Star Stores in China that they lagged behind competitors in the Chinese market.
 
Wang Jian, co-founder of Five Star, was appointed global vice president for Best Buy at the time. We have also been told that despite the sale of shares in the Company by Best Buy the two Companies still have a close working relationship when it comes to the purchase of goods.
 
Five Star, based in Nanjing, eastern Jiangsu province, has about 170 stores in seven provinces, employs more than 8,000 people and had sales of 24.7 billion yuan ($3.8 billion) in 2009, according to its website.
 
ChannelNews understands that an announcement will be made on Thursday.

 

You may also like
Deloitte In The Cross Hairs, As Dick Smith Case Rambles On
David Jones & Disney To Open Flagship Kids Store
EXCLUSIVE: Former Dick Smith Boss Now Running Kids Retail Group
Former Dick Smith Boss Nick Aboud Wants A Crack At Running Myer
Man Who Cut Disasterous Dick Smith Store Deal Now Wants Top Job At Myer