Photo-Me nabs Asda's photo business for up to £6m

Instant-service equipment group Photo-Me International has agreed to buy Asda’s photo division for a maximum consideration of £6m.

The division consists of 191 photo centres and 172 self-service kiosk sites at Asda stores. The businesses will be managed by Photo-Me under a ten-year concession and the employees will transfer across the group.

The deal, which is expected to complete at the end of October, will also see Photo-Me operate the Asda-branded online photo-processing offering for at least two and half years.

In the calendar year 2015, Asda’s photo division generated unaudited sales of about £19.3m and made an unaudited loss of £3.4m.

Photo-Me said the consideration for the division is £3.35m, subject to downward adjustment in certain circumstances. Photo-Me has also agreed to buy the inventory available at each photo centre at the date of completion, as well as central consignment stock, estimated at £2m.

The total consideration to be paid is currently estimated at £5.35m and is capped at £6m.

Photo-Me said the deal is expected to be slightly dilutive to the earnings of the UK division in the current financial year ending 30 April 2017. Thereafter, it should add “material revenue growth” to the UK-based operations, and be earnings-enhancing in the medium term.

Chief executive Serge Crasnianski said: “This is an interesting opportunity to significantly expand our UK business in a strong set of locations and increase our market share in the digital photo printing market, which we believe has growth potential in the digital age.

“Photo-Me is the leader in its field with a wide range of attractive and innovative products which we plan to introduce into the Asda stores as soon as possible, and we believe will improve the level of trading and overall performance over the next two years and beyond."

At 1420 BST, Photo-Me shares were up 0.2% to 162.75p.