Nick Scali to acquire UK retailer Fabb Furniture
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The news: Nick Scali has entered a trading halt on the ASX after confirming that it would acquire specialist UK home furniture retailer Anglia Home Furnishings, which trades as Fabb Furniture.
The numbers: ASX-listed furniture company Nick Scali will acquire Fabb Furniture for a consideration of £2.00 ($3.82) and all of the secured debt owed by Fabb Furniture for £3.5 million. The Sydney-based retailer said it intends to pay £500,000 to exercise the option to exit the existing distribution centre arrangement and also provide a networking capital injection of up to £6 million.
The acquisition will be funded through a $46 million underwritten institutional placement and a $4 million conditional placement to an entity associated with Nick Scali's CEO and managing director Anthony Scali, subject to shareholder approval being sought at the company's annual general meeting, expected to take place in October.
Eligible existing shareholders will be offered the ability to participate in a non-underwritten share purchase plan to raise up to $10 million.
The context: Nick Scali said it intends to invest further in the existing Fabb Furniture network in order to establish the Nick Scali brand in the UK. It said the acquisition will give it entry into the UK furniture market with Fabb Furniture's 21-store network and an opportunity to establish the Nick Scali brand at scale at a relatively low cost in the UK.
What they said: Anthony Scali said: "The acquisition of Fabb Furniture provides an opportunity to enhance our geographic diversity and scale beyond Australia and New Zealand for the first time.
"Fabb Furniture's gross margin is estimated to be approximately 10 percentage points lower than larger UK competitors on a like for like basis.
"As we did when we acquired Plush, we believe we can leverage the Nick Scali buying power, combined with our supply chain and logistics capabilities, to deliver significant gross margin uplift for the UK business."
The source: ASX announcement
