Melka and Tenson, the two Swedish brands of men’s wear and outdoor apparel, have been acquired by EQT Opportunity, a Swedish investment fund, along with Five Seasons, a fast-growing Swedish winter sports and golf apparel brand. EQT Partners, the high-profile private equity company behind the fund, believes that its support will accelerate the growth of the three brands in their existing markets and beyond.

Tenson and Melka previously belonged to Jacques Vert, the British retail company that bought them as part of its takeover of the former William Baird. The two brands, which are grouped under the MT Owner holding company, were formally sold for about £6.25 million (€9.7m-$12.8m) to Lagrummet December 1331 AB, an investment vehicle set up for this purpose by EQT Opportunity. The deal is expected to be completed on Dec. 29, after formal clearance by competition authorities in Norway and Germany.

The price of the transaction includes the repayment of existing debt to Jacques Vert and the assumption of net debt outstanding to third parties, including pension liabilities. After costs relating to the transaction, Jacques Vert will receive net cash of approximately £2.1 million (€3.1m-$4.1m).

The net book value of the net assets of Melka Tenson was given as £1.83 million (€2.7m-$3.6m) in Jacques Vert’s consolidated accounts for the financial year ended Apr. 29, 2006. Its revenues for the year were £24.35 million (€36.2m-$47.8m). Jacques Vert reported an operating loss for this subsidiary after the allocation of a share of central overheads, but without these charged it did turn in a small operating profit, after a series of cutbacks and investments over the last two years.

Sales stood at about €14 million for Tenson and €30 million for Melka in 2005. They grew by nearly 7 percent in 2006 on the back of marketing investments launched earlier in the year, but the company feels that the sales momentum should improve further as these investments kick in more widely. Managers of Melka and Tenson believe that the new ownership will enable them to focus more sharply on the growth of their wholesale business. This was not a priority for Jacques Vert, which is primarily a women’s wear retailer.

Under the business plan that underpinned the acquisition, Melka and Tenson will continue to consolidate their business in four core markets for the next two years. For both brands these core markets comprise Sweden, Denmark and Belgium, but for Tenson the fourth and largest market is the Netherlands, while Melka’s fourth core market is Norway.

MT Owner is currently run by Hans-Olof Ljungqvist, international sales and marketing manager, and Magnus Engdahl, head of purchasing and merchandising. Per Thelin, the former managing director for MT Owner, left the company in August after just 18 months to take up a similar position at Wedins, a big Nordic shoe retailer based in Sweden (more on it in Shoe Intelligence), and he will not be replaced for the time being.

As for Five Seasons, it was previously owned by Gunnar Johansson, the man who established the company near Gothenburg in 1982. The brand should achieve sales of about 150 million Swedish kronor (€17m-$22m) this year, up by 20 percent. Five Seasons’ distribution is strongly diversified, with only about 20 percent of sales coming from Sweden and the rest spread across Europe and the United States, and the brand entered Japan this year. A golf range was launched about 5 years ago but Five Seasons still derives about 65 percent of its sales from winter sports apparel.
Johansson and some managers of Five Seasons have retained some shares in the new entity, but the terms of the acquisition could not be determined. Over the next couple of years Five Seasons will continue to be run separately from Melka and Tenson, but synergies should be explored more thoroughly thereafter. The investment will be supervised by Paul Schrotti, partner at EQT Partners, which is one of the leading private equity groups in Scandinavia.