Canadian Tire buying Party City’s Canadian retail business
Party City Holdco Inc. has entered into a deal to sell its retail stores in Canada and grow its wholesale business.
Canadian Tire Corp. will acquire the retail business and assets of Party City’s Canadian subsidiary, including its 65 stores. The all-cash transaction is valued at approximately C$174 million (Canadian dollars). The 2018 pro forma EBITDA of these 65 locations totaled approximately C$17.6 million. Party City said proceeds from the sale will be used to pay down debt.
As part of the deal, Party City and Canadian Tire have entered into a long-term wholesale supply agreement, with an initial term of 10 years. Party City’s wholesale business, Amscan Inc., will provide Canadian Tire, which operates some 1,700 stores across Canada under multiple banners, with consumer products to its namesake division. Party City estimates that the supply agreement will effectively double Amscan’s average annual wholesale shipments into the Canadian marketplace during the term of the agreement.
“Over the last 14 years, we have successfully executed on our strategy to grow our portfolio of stores in North America and pursue strategic partnerships internationally with leading retail partners,” said James M. Harrison, CEO of Party City Holdco Inc.
“This transaction enables us to achieve both objectives, particularly as we partner with Canadian Tire to grow the Party City brand throughout Canada. We view this investment by Canadian Tire as a true endorsement of the Party City retail concept and the party category overall. More importantly, we are pleased and proud to partner with them through this long-term wholesale supply agreement, which positions us as their primary resource for party and related consumer products and innovation.”
Canadian Tire said that Party City'sproduct assortments will be made available nationally across its 500 Canadian Tire stores and online. It also plans to expand Party City's store network in Canada, and build store-in-store, pop-ups and "in-line" aisles across Canadian Tire stores.
“We believe the Party City-Canadian Tire partnership will drive more trips, improve our offers in micro seasons, strengthen our connection with millennials and Canadian families and expand the appeal of Triangle Rewards," said Allan MacDonald, executive VP, retail, Canadian Tire Corp. "With our extensive CTR store network, unparalleled retail capabilities and Party City's unique assortment, we are well-positioned to more than double Party City Canada's business by 2021."
The transaction, which has been unanimously approved by Party City’s board, is expected to close by October 1, 2019.