US's DSW steps into Canada with Town Shoes stake
TORONTO, April 15 (Reuters) - DSW Inc is entering the Canadian footwear retail market by acquiring a 44 percent stake in one of Canada's largest shoes and accessories retailer, Town Shoes Ltd, for C$68 million ($62.05 million), the two retailers said on Tuesday.
The Columbus, Ohio-based DSW said it had been looking to enter Canada "for some time" and that it may buy additional shares from other minority shareholders as part of its initial investment.
DSW also has the right to purchase the rest of the stake from the remaining shareholders after four years at a pre-determined earnings multiple, the company said.
Toronto-based Town Shoes is mostly owned by Alberta Investment Management Corporation (AIMCo) and Canadian private equity firm, Callisto Capital. DSW's 44 percent stake was purchased from AIMCo.
Town Shoes, which operates more than 180 locations in Canada under various banners, said it had sales of C$291 million for the fiscal year ending January, 2014.
Excluding one-time expenses related to the deal, the tie-up is expected to add slightly to earnings in 2014.
The current deal, which is expected to close in May and was approved by the board of both companies, gives DSW the same 50 percent voting control and board representation as Callisto.
DSW operates more than 400 stores across the United States and supplies footwear to more than 350 other retail partners.
Town Shoes, founded 62 years ago by Leonard Simpson, is located in Canadian shopping centers under its namesake and other banners including discount retailers The Shoe Company and Shoe Warehouse.
Peter J. Solomon Co is the financial advisor for DSW in this deal. ($1 = 1.0959 Canadian Dollars) (Reporting by Solarina Ho)
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