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* Deal gives TFG 400 stores in bid to expand beyond Africa
* TFG also bought stores in UK in recent years
* Price is seven times RAG expected 2017 EBITDA
* TFG full-year profit misses forecasts (Adds CEO comment, shares, FY earnings)
JOHANNESBURG, May 25 (Reuters) - South Africa's clothing and homeware retailer TFG said on Thursday it would buy menswear chain Retail Apparel Group (RAG), part of its bid to expand in developed markets with a deal that brings more than 400 shops in Australia.
TFG, or The Foschni Group, said it would pay 302.5 million Australian dollars ($225.82 million), or seven times RAG's expected 2017 earnings before interest, tax, depreciation and amortisation (EBITDA). The price excludes debt.
TFG has made three overseas acquisitions in as many years to expand beyond Sub-Saharan Africa, where weak economies limit potential. In South Africa, its business has been hampered by tighter credit rules and tough competition.
It bought British chain Whistles in 2016 and UK footwear and clothes retailer Phase Eight in 2015.
"We are excited to be able to realise our ambition to expand into Australasia through the very successful RAG business and its well established and experienced management team," TFG Chief Executive Doug Murray said in a statement.
The transaction will add low to mid-market store brands such Tarocash and Connor to TFG's portfolio of stores that include menswear chain Markham and Total Sports, the biggest reseller of Nike and Adidas merchandise in South Africa.
RAG, set up in 1987 and which also operates in New Zealand, was sold by its founder Stephen Leibowitz and private equity firm Navis Capital, which took a majority stake in 2011. It had been preparing a stock market flotation when TFG swooped.
Separately, TFG missed estimates with a 7.4 percent rise in annual profit as weak consumer confidence at home weighed, sending shares in the company lower.
TFG said diluted headline earnings per share, the main profit measure in South Africa that strips out certain one-off items, totalled 10.90 rand in the year to the end of March, slightly below a 10.98 estimate in a Reuters poll of 12 analysts.
Shares in TFG dropped 3 percent to 135.41 rand by 1234 GMT, lagging a slightly weaker blue-chip JSE Top-40 index.
$1 = 1.3396 Australian dollars Reporting by TJ Strydom and Tiisetso Motsoeneng; Editing by Jason Neely and Edmund Blair