TORONTO – U.S. retailer DSW Inc. has signed a deal to buy a 44 per cent stake in Town Shoes Ltd., Canada’s largest chain of shoe stores, for $68 million.
The shoes and accessories chain is buying the stake from the Alberta Investment Management Corp. The other main shareholder of Town Shoes is private equity firm Callisto Capital.
DSW president and chief executive Mike MacDonald says the company has been looking to break into Canada for a long time.
“Our partnership provides us a unique opportunity to bring DSW into Canada through Town Shoes’ platform,” MacDonald said in a statement.
DSW said Tuesday it may increase its stake in Town Shoes beyond 44 per cent by buying additional shares from other minority shareholders as part of its initial investment. The company also has the right to buy the rest of the retailer after four years, based on a pre-determined formula.
Callisto, on behalf of itself and the other shareholders, also has the option to sell the balance of the company to DSW Inc. after three years based on a pre-determined formula.
The deal is expected to close in May and has received the approval of the board of directors at both companies.
Town Shoes operates 182 locations under the Town Shoes, The Shoe Company and Shoe Warehouse banners. It had $291 million of sales in its most recent financial year.
DSW Inc. operates 407 DSW stores in the United States and Puerto Rico.