Merrimack, NH-based cataloger/retailer Brookstone, which mails the Gardeners Eden, Hard-to-Find Tools, and Brookstone catalogs, announced on April 15 that it signed a definitive agreement to be acquired. Buying the $499 million merchant of gadgets, tools, and gardening supplies is a consortium consisting of OSIM International, a Singapore-based retailer of health and fitness products; Boston-based private equity firm JW Childs Associates; and Singapore-based investment company Temasek Holdings.
The buyers are paying $20.50 a share, or $432.6 million, for the publicly held Brookstone. That’s nearly a third more than the $15.60 a share that Brookstone closed at the night before the announcement.
At a multiple nearing nine times earnings, “it looks like a healthy price and from an interested foreign buyer,” says Mal Appelbaum, president of New York-based Appletree Advisors. The transaction, expected to be completed in Brookstone’s second or third fiscal quarter of 2005, is subject to approval by Brookstone’s shareholders, funding under the financing commitments, and other customary conditions. The current Brookstone senior management team, including CEO/chairman of the board Michael Anthony, will remain with the company.
In a release, Brookstone says the acquisition will help it expand globally and boost its product development capabilities. OSIM’s product line complements that of the eponymous Brookstone brand, with many overlapping items such as massage chairs and ergonomic pillows. OSIM has more than 700 stores in Asia, Australia, Africa, the Middle East, the U.K., and North America. Brookstone has 288 stores in North America and Puerto Rico as well as a handful of Gardeners Eden stores.
Once the acquisition is finalized, Brookstone may develop store-within-a-store concepts in OSIM’s stores; the marketer might also open mall stores overseas similar to those in the States. “With OSIM’s 700 stores, there’s tremendous opportunity in which to flow Brookstone product,” notes Fred Anderson, managing director of Anderson Direct, a South Orange, NJ-based consultancy and financial intermediary.
Brookstone increased its annual revenue 15% last year, from $434 million in 2003. Same-store sales rose 6%. Direct marketing sales increased 21%, to $91 million for the year ended Jan. 29.
Other companies involved in the deal include CIBC World Markets Corp., which served as financial adviser to Brookstone. Ropes & Gray LLP acted as legal adviser in connection with the transaction, while Goldman, Sachs & Co. acted as financial adviser and Kaye Scholer LLP as legal advisor to the buyers.