JB Hi Fi says it and The Good Guys have"highly complementary customer bases and product offerings
13 Settembre, 2016, 03:28
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The Good Guys co-founder and executive chairman Andrew Muir said the company's lead position in home appliances was matched by JB Hi-Fi's strength in consumer electronics.
Electronics retailer, JB Hi-Fi (ASX:JBH), has entered into a binding agreement to acquire fellow electronics and appliance retailer, The Good Guys, for a cash consideration of $870 million.
JB is buying Good Guys at a good time for the company; JB's sales growth is up 11.6 per cent on the back of its chief competitor Dick Smith closing shop late last financial year, with JB saying that change will "continue to drive sales growth" through the first half of FY17, but will moderate over time.
While speculation had swirled for several months about a JB Hi-Fi acquisition, The Good Guys continued to plough ahead with plans for an IPO.
"The home appliance market in Australia is circa $4.6 billion, larger than numerous other categories JB Hi-Fi operates in and presents a significant opportunity for the company", JB Hi-Fi said in its financial presentation last month. JB Hi-Fi's share price had risen from $18.58 a year ago to $28.85 as of close of trading yesterday.
The Good Guys itself will also have access to a wider selection of home electronics; it has traditionally focused on whitegoods while selling home electronic items on the side.
JB had originally planned to buy back nearly 430,000 shares in the late half of the FY16 financial year, but "no longer intends" undertaking that move.
The deal will be funded by a combination of the proceeds of an entitlement offer worth approximately $394 million, with around 15 million new JB Hi-Fi shares issued, and a $450 million new multi-tranche acquisition debt facility.
The Good Guys and JB Hi-Fi announced the deal on Tuesday morning following months of negotiations and after the competition watchdog gave the green light. "The Good Guys is a highly complementary business which is aligned with our management philosophy and significantly enhances our offering in the $4.6 billion home appliances market".
Under the deal, The Good Guys will continue to operate as an independent brand and will retain its chief executive Michael Ford who will report to JB Hi-Fi's boss Richard Murray.