Party product retail chain Party City has announced the sale of its Canadian subsidiary retail business to Canadian Tire, alongside a long-term wholesale supply agreement.
The Canadian Tire Corporation – one of Canada’s leading retail companies – will acquire the retail business and assets of Party City’s Canadian subsidiary, furthering Party City’s international strategy of partnering with leading retailers in core markets.
The 65 retail store locations across Canada have been sold in an all-cash transaction which has been valued at approximately CAD$174 million.
Party City and Canadian Tire have also agreed to a long-term wholesale supply agreement, with an initial term of 10 years. Under the terms of the supply agreement, Party City’s wholesale business will provide Canadian Tire with consumer products, which will effectively double its average annual wholesale shipments into the Canadian marketplace.
“We are extremely excited to enter into this transaction with Canadian Tire, which is widely recognised as a premier retailer in Canada,” said James M. Harrison, ceo of Party City. “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.”
He continued: “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.”
The proceeds from the sale will be used to pay down debt as it aims to significantly reduce its net debt over the next several years.
The transaction is expected to close by October 1, 2019.