Baby City acquired by Dis-Chem group for R430 million

Pharmacy retailer Dis-Chem is set to expand its holdings through the acquisition of baby care group Baby City, with a deal understood to be valued at R430 million.

Baby City have 33 stores nationwide and Dis-Chem believe that the merger will be a suitable alignment of the company’s respective brands.

‘Good cultural fit’

Dis-Chem CEO Ivan Saltzman said that the acquisition is something that his group had been looking at completing for a number of years. 

“The acquisition is a great cultural fit and has been a target of ours for many years,”  he said. 

“The brands and businesses were built with similar philosophies, ensuring management team alignment as we take steps to unlock the value we see in the Baby City brand.”

The baby market, as usual, is absolutely booming, with the baby care sector consistently bolstered by the arrival of just under a million new bundles of joy each year. 

“The sector sees approximately 900,000 new babies annually,” the group said, adding that in the last year, Baby City had generated revenue of R855 million.

 “It has continued to trade well, relative to the COVID-19 lockdown environment, demonstrating both the resilient nature of the industry and the inherent brand equity of the retailer,” he said.

Dis-Chem stock climbs

Following the takeover, Baby City’s staff will be retained, with the Dis-Chem group’s Managing Director, Michel Aronoff, set to retain his position.

The agreement is still subject to conditions, including approval from competition authorities.

On Friday 15 May, Dis-Chem’s share price had risen 5.06% to R20.35, a welcome climb after a difficult retail performance during the COVID-19 pandemic. Dis-Chem’s share price has fallen 23.21% so far in 2020, compared to a 13.63% fall for rival Clicks over the same period.