Nick Scali Ltd [ASX:NCK] entered into a binding agreement to acquire Plush-Think Sofas for a total cash consideration of $103 million.
The acquisition will be funded through a combination of cash on hand and new debt facilities.
Nick Scali expects the transaction to be completed in Q4 2021.
The move was well-received, with Nick Scali Ltd [ASX:NCK] share price is currently up 10.29%.
The Aussie furniture company managed to gain 40% in the last 12 months, boosted by the nation’s lockdown-induced spending on furnishing and renovation.
Nick Scali acquires Plush-Think Sofas
NCK announced it will acquire Plush-Think Sofas for a cash consideration of $103 million, which is subjected to purchase price adjustments at completion.
The acquisition will be funded through a combination of existing cash on hand and new debt facilities.
Nick Scali said Plush is a leading Aussie sofa retailer with over 46 showrooms across Australia.
Plush’s FY21 revenue jumped from $111 million in FY20 to $160 million, with EBITDA also increasing from $10 million to $27 million.
Nick Scali thinks the acquisition strengthens its position as Australia’s ‘leading sofa retailer with a strong strategic rationale’.
NCK believes acquiring Plush will enhance its market position by diversifying in store format, location, and geographic exposure.
Nick Scali also flagged opportunities for further growth due to the announced deal, including new store rollsouts for both brands in Australia and New Zealand.
Nick Scali share price outlook
The acquisition of Plush-Think Sofas will help Nick Scali expand its operations as it will increase the company’s current footprint to a total combined 108 stores in Australia and New Zealand.
The acquisition is also expected to be EPS accretive in the first full year of ownership. This excludes realisation of estimated synergies which will flow post integration.
Nick Scali CEO, Anthony Scali, said:
‘Plush is a high-quality Australian sofa retailer with a strong track record of profitability and performance over a long period of time.
‘The acquisition is a strategic opportunity for Nick Scali and will allow us to leverage the increased scale of the combined group whilst providing a platform to significantly grow the store network.’
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