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Absolutely Fabulous: Dickson Poon Seeks Rest of Harvey Nicks

NEW YORK — Dickson Poon, majority shareholder of Harvey Nichols, is seeking to acquire 100 percent of the London-based department store chain through his wholly owned Broad Gain Investments subsidiary.<br><br>Dickson Poon currently owns 51.5...

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NEW YORK — Dickson Poon, majority shareholder of Harvey Nichols, is seeking to acquire 100 percent of the London-based department store chain through his wholly owned Broad Gain Investments subsidiary.

Dickson Poon currently owns 51.5 percent of Harvey Nichols, and through Broad Gain, plans to acquire the remaining 49.5 percent stake.

Under the proposal, announced Wednesday, shareholders will receive about $3.85 for each share, a 35.5 percent premium over the closing price of $2.84 Sept. 17, and a 46.5 percent premium over the average closing price of the shares during the past 30 days.

The deal puts the total capitalization of Harvey Nichols shares at $212 million.

The acquisition, along with the takeover of the banking arrangements of Harvey Nichols necessary to complete its store expansion program, represents a commitment of about $152 million by Broad Gain.

Dickson Poon should have full ownership of Harvey Nichols by early December, provided the plan is approved by shareholders of Harvey Nichols and meets certain court approvals.

The proposal comes at a time when Dickson Poon has been expanding the Nichols chain and could relieve pressures from shareholders associated with the expansion. Cash outlays associated with building and marketing new stores sometimes push stock prices down. Also, it takes some time for new stores to get up to speed with productivity levels of other stores in the chain, and to get a return on the investment.

Last week was the official launch party for the chain’s newest unit in Edinburgh, Scotland. The company is planning to open another store in Manchester in fall 2003, and has recently opened Harvey Nichols stores in Riyadh, Saudi Arabia, and in Birmingham. The flagship is in the Knightsbridge section of London.

In a statement, Dickson Poon offered his rationale for seeking full ownership of Harvey Nichols: “It represents good and certain value for shareholders in turbulent equity markets. Due to its small market capitalization and relative stock illiquidity, Harvey Nichols is not realizing any material benefit from its listing. Consequently, we believe that minority investors will welcome this opportunity for a cash exit at a substantial premium. We intend to continue working with existing management to execute Harvey Nichols’ regional store opening program and expansion of the Harvey Nichols brand into own-label sales.

“We are delighted to put forward this offer for Harvey Nichols,” Dickson Poon added, noting the 35.5 percent premium to Tuesday’s closing price, and that the offering is also a higher than the three-year peak of $3.58

John Gray, non-executive director of Harvey Nichols, expressed support for the proposal in his statement. “We, the independent directors, believe the proposal provides an attractive opportunity for public Harvey Nichols shareholders to realize their investment in Harvey Nichols at a substantial premium to the current Harvey Nichols share price and intend to recommend that Harvey Nichols shareholders vote in favor of the proposal,” he said.

Harvey Nichols — which, as Harvey Nicks, was made a household name on both sides of the Atlantic by the “Absolutely Fabulous” duo — sells top designer brands in women’s and men’s wear, beauty, home furnishings, food and its own Harvey Nichols apparel brand through its London flagship, and its other stores. The Harvey Nichols Group opened its first “boutique” store format in Birmingham last year and continues to seek further sites for rollout of this format. Harvey Nichols also owns the London restaurants Oxo Tower and Prism.

For the year ended March 30, Harvey Nichols reported profit before taxes of $18.7 million, compared with $23.4 million the year before, on revenues of $210.6 million, compared with $205.5 million the year before. Net assets were listed at $65.2 million, against $58.8 million the year before.

The store was founded by Benjamin Harvey in 1813 as a linen shop on Knightsbridge and Sloane streets and seven years later, went into partnership with Colonel Nichols. In 1991, Dickson Concepts bought Harvey Nichols from the Burton Group for $90.2 million, including about $25 million in debt. At that time, Harvey Nichols was a one-store operation in Knightsbridge. The company was listed on the London Stock Exchange in 1996.

Considered London’s premier department store through the Eighties and Nineties, Harvey Nichols has seen increased competition over the last five years from the much larger Harrods and Selfridges. Both retailers have invested substantial sums to upgrade their facilities; Selfridges alone has invested more than $100 million in the last seven years. Selfridges also has been in a race with Harvey Nichols to open stores outside London, with stores in Birmingham and Manchester. Harvey Nichols and Selfridges see the potential to have up to five units throughout the U.K., although there are only a limited number of cities large enough to support large department stores selling designer apparel. Harrods continues to have only one site, in London.

In addition to expanding Harvey Nichols, the parent Dickson Concepts has been exploring possible acquisitions or investments in luxury brands and retailers in the U.S., through its Dickson North America unit. In the past, Dickson Poon has been cited as a contender for Brooks Brothers, which last year was bought by Retail Brand Alliance, and Barneys New York, which is currently not being marketed, though is eventually expected to be sold.

Charles Jayson is president and chief executive officer of Dickson North America. He is also vice chairman of Tommy Hilfiger Handbags and Small Leather Goods Inc., of which Dickson Poon is the majority shareholder. In addition, Jayson is vice chairman of S.T. Dupont, the Paris-based men’s lifestyle brand producing such products as luxury writing instruments and lighters. S.T. Dupont is publicly traded on the Paris Bourse, with Dickson Poon the majority shareholder.

Dickson Concepts is publicly traded on the Hong Kong exchange and has more than 400 retail stores in southeast Asia and China, including Coach, Tod’s, Bulgari, Chopard, Charles Jourdan watches, Tommy Hilfiger, Ralph Lauren and its Polo Jeans division, Benetton and its Sisley division, Brooks Brothers, and Seibu department stores outside Japan.

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