Furniture retailer Nick Scali has gone deeper into couches and lounges with the $103 million purchase of rival retailer Plush.
The Scali purchase of Plush has long been mooted and will double Scali’s number of stores across the country.
Plush operates 46 showrooms in Australia and reported $160 million in revenue for the last financial year and $27 million in earnings.
The market loved the news and piuhed Scali shares up more than 10% yesterday to close at $12.10.
Plush began in 1999 in Nunawading, Victoria, operating primarily as an importer of leather sofas from Italy and Asia.
With Plush aboard, the merged company will have revenues of $533 million and earnings of $153 million, according to Monday’s statement from Scali.
Nick Scali said it would be buying Plush on a cash free, debt-free basis and expects Plush to be add to earnings in the first year of ownership.
“Plush is a high-quality Australian sofa retailer with a strong track record of profitability and performance over a long period of time,” Nick Scali CEO Anthony Scali said in the statement.
“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.”
Nick Scali had been assessing Plush as a potential takeover target for some time, telling investors in July it was looking at buying up the business.
Mr Scali said the purchase would help expand Nick Scali’s mid-market offering, with the retailer seeing opportunities to double Plush’s store footprint in underrepresented areas.
Stand by for the cash shower from Boral, which yesterday announced that it had completed the sale of its North American building products and timber division to Westlake Chemical Corporation as well as the sale of its Australian timber business.
The North American sales netted $US2.15 billion ($A2.95 billion) and the timber operations sold for $64.5 million to the Pentarch Group.
Boral still has plans to sell its Fly Ash business in North America.
The company said the proceeds will be used to reduce debt down to between $900 million and $1.1 billion.
That will leave $3 billion that can be returned to shareholders – predominantly majority owner Seven Group – through an equal capital reduction.
Boral CEO Zlatko Todocevski wished the new owners of the timber assets well.
“Completion of these strategic divestments is unlocking significant value for Boral’s shareholders,” he said in yesterday’s statement.
“We have now reached an important milestone in re-positioning Boral as a focused construction materials company in Australia. We have enviable strategic assets in Australia and a strong competitive advantage upon which to build.”
Shareholders will vote on the capital distribution at the annual general meeting on October 28.
Boral shares were up 4.2% at $6.22 at the close.