In a bold strategic move, Leeds Group, a leading UK-based textiles wholesaler, is set to sell its German subsidiary, Hemmers, for £657,000 to a subsidiary of Dutch transport specialist Nooteboom Bidco. This transaction, subject to approval by Leeds shareholders and competition clearance from the German Cartel Office, also involves Leeds Group retaining three properties owned by Hemmers, valued at approximately £5.2 million.
The decision to divest Hemmers follows Leeds Group’s concerted efforts to revitalize the subsidiary’s financial performance. Despite a modest sales increase for the year ending on May 31, Hemmers faced challenges, recording a pre-tax loss of £793,000, up from £781,000 in 2022.
Recognizing the evolving textile market landscape and the need for economies of scale, Leeds Group highlights that Hemmers, unable to operate profitably on its own, is better positioned as part of a larger organization. This strategic alignment taps into broader industry consolidation trends, enhancing purchasing and sales efficiency.
The sale is contingent upon approval by Leeds shareholders and clearance from the German Cartel Office. Encouragingly, major shareholders, representing 54.24% of the company’s shares, have indicated their intention to vote in favor of the sale.
In the face of challenges stemming from the post-pandemic era, including the closure of its Stoff-Ideen-KMR subsidiary in Germany, Leeds Group remains steadfast in its commitment to returning its core German trading subsidiary, Hemmers, to profitability.
This strategic divestiture signifies Leeds Group’s focus on optimizing its portfolio, allowing the company to leverage its core strengths amidst a dynamic textile industry landscape.
