Nick Scali (ASX:NCK) has spread its wings beyond Australasia with the acquisition of UK-based Anglia Home Furnishings (AHFL) – operating under the brand Fabb Furniture – in synch with the company’s global strategy by entering the UK market.
“The Acquisition of Fabb Furniture provides an opportunity to enhance our geographic diversity and scale beyond Australia and New Zealand for the first time,” Nick Scali CEO Anthony Scali said.
“It offers 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.”
The agreement involves Nick Scali acquiring Fabb Furniture for £2 (A$3.82) and assuming all of Fabb Furniture’s secured debt totalling £3.5 million (A$6.7 million).
The company also intends to pay £0.5 million (A$1 million) to exit the current distribution centre arrangement and inject up to £6 million (A$11.5 million) into net working capital.
“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,” Scali added.
The company post-acquisition plans to refurbish and rebrand the Fabb Furniture stores, establishing a new distribution centre, and opening new outlets to integrate the Nick Scali brand into the UK market.
Financing for the acquisition intends to be achieved through a A$46 million underwritten institutional placement and a A$4 million conditional placement to an entity associated with Anthony Scali.
The company said shareholder approval for these placements is expected at the Company’s AGM, scheduled for October 2024.
NCK last traded at $14.07.