skip to content

Bids, Mergers and Takeovers

DFS Furniture acquires Sofology

03 August 2017 08:07

DFS Furniture has exchanged contracts to acquire Sofology for an initial enterprise value of £25m, on a debt-free cash-free basis, subject to a potential further earn-out payment.

Sofology is a specialist sofa retailer with a network of 37 stores in the UK which together with a strong web presence offers customers a technology-led omni-channel proposition

DFS said the acquisition would broaden the group's appeal to customers, through Sofology's distinctive consumer proposition, and as part of the group's portfolio of strong furniture brands.

DFS said the initial consideration would be financed through the group's existing cash resources and its new bank facility.

It added: "We currently expect any further consideration, if due, to be satisfied from available bank facilities, however up to £25 million could be paid either in cash or shares at the discretion of the group's board of directors.

"While we anticipate that the transaction will result in leverage remaining at above 1.5x in the first financial year of the deal, we remain committed to reducing leverage back to beneath 1.5x, through usual cash generation, supported by planned working capital and other cash initiatives."

Completion of the acquisition is conditional upon the receipt of clearance from the Competition and Markets Authority and the Financial Conduct Authority.

DFS also to announced an agreement to refinance its existing borrowings, retaining its total facility size and covenants, but converting the current facilities to a new lower-cost five-year £230 million revolving credit facility structure.

It said the new facility, maturing in July 2022, had been arranged with a group of six banks.

DFS said: "THe financial covenants remain unchanged from DFS's current £200 million term loan and £30 million revolving credit facilities that were otherwise due to mature in March 2020.

"The new facility will lower the cost of the Group's debt financing from the financial year starting on 30 July 2017 by approximately £1 million per year.

"An additional £100 million uncommitted accordion feature also provides further potential headroom for any currently unforeseen future funding needs.

"Unamortised issue costs in respect of the Group's current facilities amounting to £1.4 million will be written off following this refinancing as part of the Group's finance charges and will be treated as an exceptional item in the financial year ending 28 July 2018."

Chief executive Ian Filby said: "While the UK furniture retail market continues to be very challenging, we remain focused on making strategic progress to strengthen our position in living room furniture.

"This acquisition represents a clear opportunity for DFS to accelerate our proven strategy of broadening our appeal, generating substantial long-term returns for shareholders underpinned by well-understood synergies.

"Sofology's distinctive market position is a good fit with our existing brands."

At 8:07am: (LON:DFS) DFS Furniture Plc share price was +8.38p at 228.13p

Story provided by StockMarketWire.com

Related Company: DFS

Info Point:

To buy or sell shares call our Dealing Room on 0113 243 6941.

Too much jargon? Our glossary will help make sense of things.

Find out more about our Share Dealing Services.

Client Area Access

» Secure Login

» Not registered yet?

Bluezest Aviva Aberdeen

Branch Finder

Redmayne-Bentley have High Street branches throughout the UK. Find your nearest branch.