Majestic Wine PLC (LON:WINE) has announced asset divestments totalling £100mln as it focusses on the growth of its Naked Wines brand, which is based on a disruptive e-commerce model.
It has agreed to sell the Majestic Retail and Commercial businesses - Majestic Wine Warehouses Limited (MWWL) and Les Celliers de Calais SAS (LCDC) - for £95mln to a vehicle controlled by Fortress Investment Group LLC.
Separately, it agreed the sale of freehold property owned by MWWL to a third party, with the company expecting to realise some £5mln subject to approval of a planning application for the redevelopment of the property.
READ: US investor Fortress frontrunner in Majestic Wine bidding war
The company said it will use the proceeds to pay off debt, invest in Naked Wines and a £3.8mln return to shareholders via a special dividend.
"I am delighted that we have managed to secure an independent future for both Naked and Majestic Retail and Commercial, allowing both companies to pursue growth by focusing on their unique propositions,” said Rowan Gormley, Majestic chief executive.
City broker Liberum, in a note, highlighted that it is good news for the wine-seller’s share price though going forward investors may need to patient.
Analyst Wayne Brown said: “this deal highlights significant shareholder value for current holders, but such with all things from this management team, they giveth with one-hand and taketh with the other.
“Unless one is a believer in Naked Wines and its ever increasing investment cycle, one needs a long term horizon.”
Liberum repeated a ‘buy’ recommendation, with a new price target of 400p.
Brown added: “We have always been fans of Naked Wines but management have to go much further convince the market that this ever increasing investment cycle is the right things to do and disclosure needs to adapt to convince this is so.
“Though management communication requires some work to win over investors, the deep value on offer should start drawing much greater interest.”