Telecom picks up Gen-i in Watson's NZ shake-up

By PAUL PANCKHURST

Eric Watson's Cullen Investments is selling its IT services firm Gen-i to Telecom for $62.5 million.

It is the latest move in a shakeup of the high-profile financier's New Zealand interests.

The initial market assessment: Cullen Investments got a good deal.

One analyst said the price looked "a little rich" but would be justified if Telecom could use Gen-i to become more deeply embedded within corporate customers.

Telecom said the purchase would help its information communications technology business to expand in New Zealand and Australia.

Gen-i, which has 716 staff in Australia and New Zealand, posted a trading profit of $7 million for the year to April 30 on revenue of $155 million.

The sale is subject to standard conditions with settlement due by the end of the month.

The Watson empire is split into three parts: Cullen Investments, the listed Pacific Retail Group - which he majority owns - and Hanover Group, co-owned with Mark Hotchin.

PRG is selling off retail chains Noel Leeming and Bond & Bond with the businesses expected to go to trade buyers for up to $150 million.

One prospective bidder, Briscoe Group, has drifted out of the picture but the market talk is that another trade buyer and three or four private equity firms have made indicative bids.

The proceeds will help to shore up the money-hungry Powerhouse, the UK retailer that PRG bought last year from its receivers.

Hanover last month bailed out of Metlifecare, the listed retirement village operator, selling a nearly 10 per cent stake for $17.4 million. That stake was earlier flicked across from Cullen to Hanover.