Music and entertainment retail giant HMV Group has agreed to sell its 62-store HMV Japan business to DSM Investments catorce Co. Ltd for ¥17 billion (£70 million) in cash.

The deal is expected to be completed by the end of August, HMV said today.
The HMV Japan business - which includes HMV Japan KK and HMV Retail Limited, and the right to use the HMV name in Japan - was put on the block in recent months following a "strategic review" of the group's operations.

"Following recent consolidation in the market for entertainment retailing in Japan, and our review of the strategic options for HMV Japan, we have decided that this sale represents the best value for our shareholders," comments HMV Group CEO Simon Fox in a statement.

DSM Investments catorce Co., Ltd is a special-purpose company of Daiwa Securities SMBC Principal Investments Co. Ltd, a joint-venture launched by Daiwa Securities Group Inc. and Sumitomo Mitsui Financial Group, Inc.

Fox adds that the divestment enables HMV to focus on the areas where it has "market-leading positions."

Proceeds of the sale will be used to pay-down HMV Group's debt, "which is an important step towards meeting our medium term leverage targets," Fox adds.

HMV Japan was established in Tokyo in 1990. For the year ended April 28, the Japanese business generated sales of ¥47 billion, operating profit of ¥745 million and operated with gross assets of ¥14.8 billion.

The sale price represents a multiple of nine-times the EBITDA of the ¥1.9 billion achieved by the Japanese business in its most recent financial year.

Shinsei Bank Limited served as financial advisor to HMV Group plc during the transaction.

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