Australian furniture group Nick Scali has announced it has entered into agreement to acquire home furniture retailer, Anglia Home Furnishings Limited (AHFL), trading as Fabb Furniture.
Under the Acquisition, Nick Scali Limited will acquire Fabb Furniture for a consideration of £2.00 (A$3.82) and all of the secured debt owed by Fabb Furniture for £3.5m (A$6.7m). Nick Scali intends to pay £0.5m (A$1.0m) to exercise the option to exit the existing distribution centre arrangement and also provide a net working capital injection of up to £6.0m (A$11.5m).
Post Acquisition, Nick Scali intends to invest further in the existing Fabb Furniture network in order to establish the Nick Scali brand in the UK pursuant to its UK growth strategy, including via store refurbishments and re-branding, establishment of a new distribution centre and new store openings.
The re-branded and re-furbished store network will transition to the Nick Scali product range, and leverage Nick Scali’s buying power and supply chain.
The Acquisition and additional investment will be funded by a A$46.0m underwritten institutional placement and a A$4.0m conditional placement to an entity associated with Anthony Scali, CEO and Managing Director of Nick Scali, subject to Nick Scali shareholder approval being sought at the Company’s AGM expected to be in October 2024.
Founded in 1979, Fabb Furniture has a long-established presence in the UK home furnishings market. The business operates a 21-store network across the UK, all located in out-of-town retail parks and predominately in large-scale format. The total retail real estate footprint is over 24,000 square metres realising over 39,000 square metres of retail space.
The Acquisition of Fabb Furniture is complementary to Nick Scali’s existing business and provides a compelling opportunity for Nick Scali as follows:
- entry into the large and attractive UK furniture market with an immediate 21 store network
- unique opportunity to establish the Nick Scali brand at scale at a relatively low cost in the UK
- opportunity to provide the UK market with a Nick Scali quality / value product offer
- significant opportunity to drive profitable growth in the medium term
- committed and long-tenured local management team with deep operational experience to support the UK growth strategy
Nick Scali CEO, 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.”
“The Acquisition provides us an immediate entry point into the large UK market with a 21-store network across key locations; a scaled platform to establish the Nick Scali brand and product offering in an attractive new market.
“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.”
