Blue Diamond’s expansion in UK ‘good for Guernsey’
GUERNSEY’S Blue Diamond group is expanding with a deal to buy eight more UK garden centres that has also been described as ‘good news’ for the island.
The garden centre operator has bought eight Wyevale centres, which are spread across England and Wales, from Guernsey-based Guy Hands’ Terra Firma for £34.25m. plus stock. Blue Diamond is also bidding for a further Wyevale centre, which would conclude later this month if successful.
Once the acquisitions are concluded, the company would have a total of 30 stores nationwide as well as centres in St Peter in Jersey and Le Friquet in Guernsey – where the business is headquartered. Overall headcount will increase to around 2,700 people, of whom 150 are in Guernsey.
‘This is good news for the island,’ said Richard Hemans, group finance director and company secretary at Blue Diamond. ‘It is important that people know there are businesses in Guernsey that are growing and looking to expand in the island and outside the island.
‘This is a real success story for Guernsey. We are owned, managed and headquartered here. We are very proud of our heritage and we are looking to build on that into the future.’
In an update to shareholders, Blue Diamond said that the confirmed deal to purchase the eight Wyevale centres will lead to a 38% increase in the number of sites it operates and an initial 30% rise in turnover.
Over time, the company is anticipating that the acquisition will improve the profitability of the group well beyond the current profit being made by the centres being purchased. This will be done by introducing the Blue Diamond product range, focusing on its core customers, raising merchandising standards, refurbishment of the stores and removing concessions whose products Blue Diamond can offer itself.
The significant increase in scale is also expected to bring benefits for margins across the whole group.
Alan Roper, managing director of Blue Diamond, said: ‘We are delighted to be acquiring these fantastic centres. Over the next three years, we plan to invest £16m. to remodel and transform them into destination centres modelled around our Redfields Garden and Living Centre in Hampshire and our Blue Diamond Garden and Home store near Nottingham.
‘We look forward to working with our new colleagues across the centres and welcoming them into the Blue Diamond family.’
Justin King, vice chairman of Terra Firma and head of portfolio businesses and chairman of Wyevale Garden Centres, said: ‘Terra Firma is delighted that Wyevale Garden Centres has agreed the sale of 10 centres including a portfolio of eight to Blue Diamond.
‘Following the launch in May of a formal sale process for Wyevale Garden Centres through Christie & Co, Terra Firma has received a significant number of offers for all or part of the remaining Wyevale Garden Centres business from national, regional and financial operators as well as local entrepreneurs. We are currently evaluating these offers.’
The deal is being financed through a combination of £21m. additional borrowing from NatWest and the sale and leaseback of three Blue Diamond centres – including two of the sites it is acquiring – that will yield £26m. before expenses and taxes.
The financing plan covers the cost of acquisition and subsequent capital expenditure and working capital needs, said the firm.
Blue Diamond, which grew out of the Fruit Export Company, is also planning to maximise free cash flow in the near term so as to reduce debt levels as quickly as possible.
