On January 25 2016, Readen Holding Corp a Nevada Corporation (The “Company”) enter into an Merger agreement (The “Merger Agreement”) with Neckermann.com webshop BV a Dutch Limited liability company (“Neckerman”)
On the same date the company entered into an asset transaction (The “Asset Transaction”) to acquire 8 stores in the Netherlands and 5 Stores in Belgium.
Pursuant to the terms of the Merger Agreement the company agreed to acquire 100% of all the issued and outstanding shares of Neckermann.com webshop in exchange of 22,75% of the issued and outstanding shares of Readen Retail BV, a fully owned subsidiary of Readen Holding Corp.
As a result of the Merger Agreement the company became a significant majority owner of Neckermann.com, The Merger Agreement contains customary representations, warranties and conditions.
As a result of the Asset Transaction The Company is able to open 13 stores in 2 countries within one months’ time. These stores have well trained staff and are visited by many customers daily.
About Neckermann.com webshop BV & the 13 stores
Neckermann was started in the 1930’s in Germany as one of the first post order companies of Europe, and quickly grew to be the biggest post order company of Germany. In late 1960’s Neckermann also entered the Dutch market. With the approval of the Dutch financial authorities Neckermann was able to offer its goods on consumer credit.
Neckermann grew to be one of the biggest retailers in The Netherlands. In 2012 Neckermann had a turnover of over €100.000.000 but was having issues adapting it strategy to an online webshop. Because of high operating expenses Neckermann needed to file for bankruptcy in 2014. After a quick restart of the company Neckermann Holland was sold to a Dutch private equity company.
End of 2015 Neckermann.com was able to obtain the approval of the Dutch Financial authorities again and is one of only a few companies in the Netherlands allowed to sell on consumer credit again, this will significantly boost sales.
Neckermann.com is one of the most recognizable brands in The Netherlands with a brand awareness of over 80% and a database build in the past decade including 2.4 Million Email addresses 600.000 house addresses and 110.000 credit ratings of former Dutch Neckermann.com customers.
The 8 stores in the Netherlands are located in: Meppel, Emmen, Almelo, Ede, Delft, Dordrecht, Zutphen and Amsterdam. This provides a good spread in the the centre of the Netherlands. The 5 Belgium stores are located in the Antwerp and Brussels region.
Deal specifications
Readen Holding Corp is merging its current consumer retail activities (D5avenue.com) with the consumer retail activates of Neckermann.com this results in a company in which Readen Holding Corp has a majority of the share capital of the following entities:
Neckermann.com Webshop BV
Will be the entity responsible for the online activity of Neckermann in The Netherlands, the webshop of Neckermann will be the main source of revenue, with a revenue of over €100.000.000 in 2012 Neckermann should be able to quickly recover from its restart and obtain a leading position again in the Dutch retail landscape.
Neckermann Retail BV
Will be the entity responsible for the physical stores in the Netherlands, in February 2016 Neckermann will open 8 stores in the Netherlands and the aim is to grow towards 40 stores spread equally over The Netherlands,
D5avenue.com BV
Will be the entity responsible for the online activities of D5avenue.com, D5avenue.com will be used as outlet and to deliver products via partner programs to other sales channels.
Neckermann.com webshop BVBA
Will be the entity responsible for the online activity of Neckermann in Belgium
Neckermann Retail BVBA
Will be the entity responsible for the physical stores in Belgium, in February 2016 Neckermann will open 5 stores in Belgium
Risk Factors
The following are certain risks associated with Neckermann.com business
Neckermann.com is active in a very competitive industry, consumer retail, and will need to keep adapting in order to be on top of its game
Consumer retail in the Netherlands has changed rapidly in the past years, new companies have started and have been growing rapidly where old brands have missed the opportunities and have lost market share. Neckermann.com has already had its bankruptcy and with its recent restart in smaller form Neckermann.com will be able to make quick changes and adapt to market changes rapidly.
Neckermann needs to increase revenue in order to become profitable
Neckermann.com has not yet fully recovered from its bankruptcy and is not yet profitable, Neckermann.com will need to increase revenue and profit margins in order to become profitable. With the networks and expertise of Readen Holding Corp Neckermann should be able to increase its revenue and profit margin.
Opening stores brings extra liabilities
With the start of 13 stores Neckermann.com will have extra liability, rent, extra personnel, and rent expenses. The stores need to be able to make a profit in order to justify the start of 13 stores.
FINANCIAL INFORMATION
Neckermann retail BV, D5avenue.com BV, Neckermann.com webshop BVBA and Neckermann retail BVBA are newly established entities and there for do not yet have financial history
Neckermann.com Webshop BV is an entity started after the restart of Neckermann and has there for limited financial information.
Creation of a direct financial obligation
Besides the merger of the consumer retail activities Readen Holding Corp is obligated to fund the first €1.500.000 of capital needs of Neckermann.com this investment will be used to grow online presence, increase sales, and implement the consumer credit sales into Neckermann.com webshop activities.
SUPORTING THE GROWTH
In order to fully support Readen Holding Corp Consumer retail activities Readen Holding Corp signed a new rental agreement for the real estate object located on Nikkelstraat 4 AJ in Naarden The Netherlands. This object has 600 square meter of office space and 2250 square meter of warehousing. Total cost is €85.000 on yearly basis.
This transaction supports the growth strategy of Readen holding Corp, to grow its position in the consumer retail market. With a brand name like Neckermann with a brand awareness of over 80% in The Netherlands and Belgium, and 13 stores in 2 countries Readen holding Corp is on track.