French Connection Group, together with Jamie and Jessica Seaton, have entered into an agreement conditional upon French Connection shareholder approval to sell the entire issued share capital of Toast Mail Order to Bestseller United for gross proceeds of £23.3m, the group announced on Monday.
The London-listed firm said the disposal would comprise consideration of £21.3m payable in cash on completion, and the distribution to the sellers by way of a pre-completion dividend of surplus cash on Toast's balance sheet of £2m.
French Connection said the disposal represented an enterprise valuation, including the dividend, of approximately 12.2x Toast's EBITDA for the year ended 31 January.
The board said the disposal would enable the company to focus further on the French Connection brand in its core retail, wholesale and licensing businesses, with the net cash proceeds to be used for general corporate and working capital purposes and to support the company's continued turnaround and return to profitability.
Completion of the Disposal, subject to French Connection shareholder approval, was expected by the end of April.
French Connection owns 75% and the Seatons own 25% of the issued share capital of Toast.
After the payment of management exit awards, the amounts due to the Seatons under the terms of the Toast shareholders' agreement between Toast, the Seatons and French Connection and transaction costs, the disposal - including the dividend - was expected to result in net cash proceeds to French Connection of approximately £13.9m.
Toast was described by French Connection as a "premium lifestyle brand" which sells womenswear, accessories, nightwear, loungewear and homeware.
Its headquarters are in London, and it has a second office and warehouse facilities in Swansea where it was originally founded.
Toast sells its products through three channels - online, a network of 12 retail stores, and through wholesale arrangements with John Lewis.
In the financial year ended 31 January, Toast generated £19m of revenue compared with £16.7m for the year ended 31 January 2017, and £1.5m of underlying operating profit before tax compared with £1.1m of underlying profit before tax for the prior year.
Toast had gross assets of £8.8m as at year-end.
"This is great news for Toast and its highly talented team," said French Connection chairman and chief executive Stephen Marks.
"Toast is a very strong brand and I have no doubt that the team will continue to develop it further under Bestseller's ownership and Suzie's continued leadership."
Marks said the price achieved for Toast reflected the strength of the brand and the business built behind it.
"French Connection will use the transaction proceeds to underpin its core business, allowing us to focus on our priority of returning to sustainable profitability and growth.
"I would like to extend my thanks to all of the Toast management team for their commitment and dedication to the Toast business.
"We wish them every success in the future."