Telstra has acquired a big chunk of its retail stores from its former landlord Vita Group for $110 million, officially ending their 26-year partnership.
The agreement comes eight months after the telco first announced plans to buy back some 270 retail stores across Australia, 104 of which were operated by Vita.
The sale covers Vita’s entire retail information and communication technology (ICT) business, which also includes some Telstra Business Technology Centres (not initially part of the sale) and technology accessories retailer Sprout on top of the Telstra stores.
Vita will focus on its Artisan Aesthetic Clinics business moving forward, using some of the sale's proceeds to fund growth plans.
In the announcement, Vita said the decision to sell the whole ICT business comes amid concerns of an “uncertain economic environment and changing ICT landscape” and decided to sell it now instead of after the Telstra Dealer Agreement (TDA) expires on 30 June 2025.
“This is a good outcome for all stakeholders and the fact that we have been able to reach transition arrangements that provides certainty of next steps and ensures value for all parties, is positive,” Vita Group chief executive Maxine Horne said.
“Vita has enjoyed a long-term strategic relationship with Telstra, in which over the last 26 years I believe both parties have gained significant benefit from one another. I am exceptionally proud of our people and the business we have built from the very first Fone Zone store in 1995 through to the significant portfolio of Telstra stores that our highly skilled Vita ICT and support team run.
“In addition, over this time, we have also created and developed the brand of Sprout Accessories, one of the largest accessory providers in Australia. All of this, in my opinion, will be of immense benefit to Telstra.”
Horne added the time was right for both the company’s IT and aesthetics categories to move forward with their respective strategies. “In Vita’s case, this is focusing on the growth opportunity we have in front of us, with the Artisan network,” she said.
A large chunk of the $110 million purchase price, somewhere between $65 to $75 million, will be paid to shareholders as a fully franked special dividend, or $0.39 to $0.45 per share. Vita will retain around $35 million to fund the remaining Artisan Aesthetic Clinics business.
A shareholder vote will be held at an extraordinary general meeting scheduled for 5 November 2021. Vita Group’s board unanimously recommends that shareholders vote in favour of the sale.
“This agreement represents good value for our shareholders and provides certainty in a highly challenging and dynamic telecommunications market,” Vita Group chairman Dick Simpson said.
“The Vita Board unanimously supports the offer and believes that Vita is best positioned to succeed in the future, in the growing skin health and wellness industry.”