BRISBANE, AUSTRALIA: Universal Store Holdings Limited (ASX:UNI) has entered into a binding agreement to acquire 100% of Cheap THRILLS Cycles Pty Limited (CTC), trading as THRILLS, a designer, wholesaler and retailer of casual youth fashion apparel.

Universal Store has agreed to acquire 100% of THRILLS for an initial notional Enterprise Value of $50 million (on a debt free/cash free basis), representing 6.8x FY22 underlying EBIT. Completion of the transaction is subject to the satisfaction of certain conditions precedent.

Consideration will consist of $17.5 million in cash, $17.5 million in UNI shares and a notional amount of $15.0 million in deferred variable consideration (“Deferred Variable Consideration” or “DVC”). The quantum of DVC ultimately paid is subject to the future financial performance of CTC.

The initial cash consideration and acquisition costs will be funded from existing cash reserves of Universal Store.

Alice Barbery, Universal Store’s CEO and Managing Director said: “I am delighted to cement our partnership with the three founders of THRILLS. In THRILLS, Brooke, Tabitha and Ryan have built an iconic youth fashion brand and have a proven capability to deliver products our customers love.

Strategic rationale

CTC is an attractive business with a strong track record of growth and exciting prospects for future expansion. The ‘THRILLS’ brand is the largest and best known brand in the CTC business and offers vintage and coastal inspired youth fashion apparel with broad appeal across men and women.

Its’ brand attributes and design ethos give THRILLS scope to be an enduring Australian fashion brand. CTC also owns various emerging brands at different stages of development. CTC management is proving a capacity to identify market gaps and unmet demand and design and deliver unique and high-quality products and brands to meet these needs, complementing Universal Store’s customer-led strategy.

CTC will continue to operate as a standalone business and will maintain its focus on delivering outstanding service to its customers and retail partners. These retail partnerships are expected to facilitate further range expansion and continued refinement in the product development process. CTC’s emerging brands present an exciting incremental opportunity for further growth for Universal Store.

CTC has developed best-in-class brand management and product development expertise and has deep relationships with Universal Store and other third-party retail accounts in Australia, New Zealand and the USA.

CTC has a fast-growing retail channel (currently 8 stores, and 2 further stores committed to open by end of November 2022) and an emerging online channel. With Universal Store’s support, CTC expects each of these channels to continue to grow as the Company brings new ranges and brands to market.