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Maxine Horne walks away from Telstra in $110m deal

Business

After 26 years, the Vita Group has cut its ties to Telstra and will sell its retail outlets to the communications giant for $110 million, returning all but $35 million to shareholders.

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The deal, which also includes Vita’s Sprout business, follows a decision by Telstra in February to move all branded retail stores to corporate ownership by 2025. It meant Vita had to pivot to its growing cosmetic clinics business.

Vita had 100 Telstra branded stores and historically they had provided the bulk of its revenue, but the company had decided five years ago that its future was in the cosmetic clinics business. It bought six clinics in 2017 and has expanded to 20 under the Artisan brand.

Following completion of the deal it is expected that Vita will pay a fully-franked special dividend worth up to $75 million, representing a payout of between 39 cents and 45 cents a share, plus franking credits of between 17 cents and 19 cents.

The deal will mean founder and executive director Maxine Horne will receive at least $11.5 million for her 29.5 million shares in the company.

“Vita intends to utilise the remaining portion of proceeds, currently estimated to be approximately $35 million, to fund further growth of the Artisan Aesthetic clinics business,” Vita said.

“While Vita could choose to continue to trade its Telstra retail branded stores and Sprout accessories business up to that date (2025), the proposed transaction aligns with Vita’s strategy to focus on other growth markets.

The deal will need shareholder approval and the board has recommended a vote in favour.

Chairman Dick Simpson said the deal was good value and provided certainty in a highly challenging and dynamic telecommunications market.

The deal brings to an end a relationship with Telstra that started in 1995 when founder Maxine Horne opened her first Fone Zone store.

By 2008 there were 164 Fone Zone stores and in 2009 the company signed an exclusive master license dealer agreement with Telstra.

Shares in Vita Group fell 2.7 per cent this morning.

 

 

 

 

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