JB HI-FI BUYS THE GOOD GUYS

Written on the 13 September 2016 by James Perkins

JB HI-FI BUYS THE GOOD GUYS JB HI-FI (ASX: JBH) will buy electronics and whitegoods retailer The Good Guys for $870 million in cash.

The purchase brings together two of Australia's largest electronics retailers and accelerates JB Hi-Fi's move into the whitegoods market.

JB Hi-Fi CEO, Richard Murray, says, "The acquisition is a very attractive strategic opportunity for JB Hi-Fi since 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."

The purchase will be partly funded by a $394 million retail and institutional capital raising venture, where existing JB HI-FI shareholders will be able to buy one new share per 6.60 existing shares at a price of $26.20 each. A total of 15 million new shares will be issued.

The remaining $500 million will be funded through new and existing debt facilities.

The transaction is expected to complete late this year, or early 2017.

The Good Guys, founded in 1952, has a network of 101 stores across Australia. In the 12 months to 30 June, the business had $2.09 billion revenue and an EBIT of $74.2 million.

The entire home appliances category is worth $4.6 billion annually, making the Good Guys a clear market leader in this area. JB Hi-Fi had already made a move into this market, under the JB Hi-Fi Home brand.

The Good Guys CEO, Michael Ford, will continue in the role under the new ownership, alongside the existing management of the business.

It is expected the acquisition will deliver net synergies of $15-20 million over the three-year integration period through buying, logistics and supply chain efficiencies.

Costs associated with bringing the two businesses together will be between $10-12 million in the first year post completion.

As part of the announcement, JB Hi-Fi also said it had cancelled its share buyback plan announced on 15 August 2016.

JB Hi-Fi shares are in a trading halt this morning, as a result of the announcement. Shares are expected to return to trade on 16 August.



Author: James Perkins Connect via: Twitter LinkedIn

Latest News

FORMER MFS EXECUTIVES HIT WITH DISQUALIFICATIONS AND MASSIVE FINES FOR MISAPPROPRIATING FUNDS

FIVE key players involved in an investment company that collapsed in 2008 owing $2.5 billion have been ordered to ...

SURFSTITCH BATTLING FOR SURVIVAL

QUEENSLAND based online retailer SurfStitch Group has gone into a voluntary trading halt for three months after it wa...

STARTUP SUCCESS BOILS DOWN TO PERSONALITY, SAYS EXPERT

THOSE who own startups will know that there are many essential qualities of a good entrepreneur; their tenacity, fina...

THE AMBITIOUS PLAN TO TURN A COLLAPSED FRANCHISE INTO AN EXPANDING BUSINESS

AUSTRALIA'S newest master franchise is set to launch in October as a commercial cleaning operation, resurrecte...

Related News

STARTUP SUCCESS BOILS DOWN TO PERSONALITY, SAYS EXPERT

THOSE who own startups will know that there are many essential qualities of a good entrepreneur; their tenacity, fina...

SLATER AND GORDON TAKES SPOTLESS TO COURT

SPOTLESS Group (ASX: SPO) has been hit by a class action launched by Slater and Gordon (ASX: SGH) in the Federal C...

TOPSHOP GOES INTO ADMINISTRATION AMID VOLATILE RETAIL MARKET

TOPSHOP has become the latest in a string of retailers blasted by the volatile retail market, as the iconic fashio...

SIGMA'S SHARE PRICE TAKES A BATTERING AS IT LAUNCHES LEGAL ACTION OVER SUPPLY DEAL

SIGMA Healthcare (ASX: SIG) has taken the MyChemist and Chemist Warehouse chains to court to demand they continue to ...

BOOK YOUR FUNCTION SPACE HERE

 

 

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter