Emaar Properties plans to sell fashion portal Namshi to noon for $335.2m
Deal value is $335.2m, and for noon the Namshi buy would be a big plus
Dubai: Emaar Properties has decided to 'in-principle' sell its fashion and accessories portal Namshi to noon, the Gulf ecommerce giant in which the Saudi wealth fund has a sizeable stake. It was in 2017 that Emaar bought a majority stake in Namshi, and making it one of the key platforms for its online strategies.
Both Namshi and Saudi-headquartered noon, incidentally, feature Mohammed Alabbar as a key shareholder. "The planned divestment is with a related party to the company, noting the concerned board member did not participate or vote in the meeting," said Emaar.
Set at $325.2 million
"The price shall be a cash consideration of $335,200,000 noting that the price is within the range which has been defined by an independent valuer approved by the Securities & Commodities Authority," Emaar said. "The above cash consideration is the equity value of Namshi, which is equivalent to $350 million of 'enterprise value' of the company.
"This is adjusted for the debt at the company level and the normalized working capital required for the company. Emaar will receive the equity value as the cash consideration for the sale."
"Detailed information will be disclosed once the approvals of noon board is received formally," said a statement.
Two-step deal at $281m
In 2017, Emaar acquired a 51 per cent stake in Namshi for $151 million from Global Fashion Group. And in 2019, it bought out the remaining 49 per cent for around $129 million-$130 million. (2017 was a big year for ecommerce deals in the UAE and Gulf, with Amazon taking over Souq.ae.)
It was this week that Emaar said its Board of Directors was to take up the potential sale of Namshi. Immediately thereafter, Emaar’s stock went through a sharp rise. On Friday morning, the Dubai Financial Market suspended trading in the stock until after the Board came up with its decision.
There had been talk about Namshi getting significant interest from some Saudi buyers, though it was never verified. Noon, which is 50 per cent owned by Saudi Arabia’s PIF, would see Namshi as a good fit within its wider portfolio, and also give it deeper access to a high spending clientele that Namshi has built through the years.
What about for Emaar Properties? “Emaar Malls’ acquisition of Namshi in 2017 was both opportune and innovative,” said an analyst. “Its sale now may imply that the Malls division is reverting to the traditional brick-and-mortar play and/or looking for other acquisitions In the online space.”
Second big one in 2 weeks
For Emaar this is the second big deal it has embarked upon in as many weeks; earlier, it confirmed the buyout of the stake held by Dubai Holding in the operating company overseeing the Dubai Creek Harbour development. The size of that deal is Dh7.5 billion.
Incidentally, Emaar Malls was merged back into Emaar Properties late last year and its stock delisted from DFM.
Restart trading
On Monday, Emaar Properties will restart trade at Dh5.91, and will be aiming for the 52-week high of Dh.47. The developer had reported record sales from its Dubai/UAE operations in the first six months, and the chances are that shareholders would support the 'back to basics' approach by selling Namshi.
"Fact remains that Emaar is a property company, a creator of destinations, physical destinations," said an industry source. "Namshi was a loose fit in the wider Emaar universe and would be better off part of noon.
"Fashion and accessories under the Namshi platform will give noon access to a high-spending consumer base, and any integration of processes shouldn't take long."
"The in-principle sale of Namshi fits in the overall strategy of noon’s e-commerce ambitions and raises the stakes for competition in the regional markets," said an analyst.