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Footwear industry moots private equity sale for Office

Industry insiders have said Office is likely to be sold to another private equity company after its owner, Silverfleet Capital, appointed bankers at JP Morgan to explore a potential sale or float of the footwear retailer.

The footwear chain, which has 108 shops in the UK and Germany, was acquired by Silverfleet Capital from West Coast Capital for just under £150m in 2010. It is thought the retailer has now been valued at £300m.

Footwear insiders told Drapers a trade sale is unlikely due to the “high price tag” and that the business is likely to be sold to another private equity company.

The managing director of a major UK footwear multiple said: “It looks like they are waving a flag to sell the business; an IPO is unlikely in this volatile market. It’s the cycle of an investment buyout: they add value, then pass it on to another one. A management buyout isn’t likely as it would have happened by now and there isn’t a trade buyer in the UK that would pay that amount - £300m is too rich for [Sports Direct owner] Mike Ashley’s blood.”

One footwear chain owner agreed. “Office is still an attractive purchase for a venture capital company. No one in the trade would be interested. People like [Arcadia owner] Philip Green buy businesses at rock-bottom prices and Sports Direct isn’t known for paying top dollar for anything. None of the big boys in UK footwear would buy it at that price.”

Another industry veteran said: “No one other than private equity would buy it. It’s a bit like pass the parcel with those guys; the price is too high for trade.”

One chairman of a footwear chain said: “They are looking for buyers and it’s an attractive purchase. Chinese and US retailers and investment companies would be interested. The key for Office is expansion overseas. To continue to grow they have to develop their European business.”

Office opened its fourth German store in Hamburg this week and a Cologne store will open in February. Sales for the year to January 26 were up 5% to £256m while EBITDA was £34m.

Office declined to comment.

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