Adairs has snapped up smaller rival Focus on Furniture for $80 million.
The deal gives the buyer control of 23 stores – 15 of which are in Victoria – a Melbourne head office and warehouses in Adelaide and Sydney.
The payment will be structured as $74m cash and 1.71 million shares (worth $6m), to Focus’ chief executive officer and major shareholder Rob Santaluca.
Focus will continue to operate alongside Adairs.
The acquisition comes seven weeks since Nick Scali paid $103m for Plush which will also run independently.
The local bulky goods furniture market is worth more than $8.3 billion; Focus holds a 1.9 per cent share.
Harvey Norman is the country’s market leader measured by the number of outlets – with 194 stores.
It is followed by Fantastic Furniture (84), Amart Furniture (67) and Nick Scali at 62 or 109 factoring in Plush (story continues below).
Focus on Furniture
Focus is deriving annual revenue of c$150m.
It is a vertical business – it designs and develops in Australia, manufacturing some products in south east Asia.
“Focus controls its entire product life cycle, which allows it to offer a value for money proposition while retaining strong margins,” Adairs said upon announcing the acquisition.
The parent intends to increase the number of outlets to between 50-60, which it said is the industry standard for national retailers of its type, and diversify the offering, adding occasional furniture and decorator items.
Presently, Focus has 11 Melbourne shops but only one in each of Adelaide, Brisbane, Canberra and Sydney; it derives about 78pc of its revenue from lounge and dining suites.
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