JB Hi-Fi will buy rival electronics retailer The Good Guys for $870 million.
The move is set to strengthen JB Hi-Fi’s presence in the home appliances market, with the retailers having highly similar customer bases and product offerings.
According to JB Hi-Fi, the acquisition of The Good Guys creates a ‘best-in-class’ retailing combination.
“The acquisition is a very attractive strategic opportunity for JB Hi-Fi since The Good Guys is a highly complementary business which is aligned with our management philosophy and significantly enhances our offering in the $4.6 billion home appliances market,” says JB Hi-Fi chief executive Richard Murray.
Current CEO of The Good Guys Michael Ford will continue in his role under JB Hi-Fi ownership, Murry confirmed. Each brand will maintain independent go-to-market strategies and support offices.
Murray says JB Hi-Fi expects the acquisition to deliver synergies of $15-20 million per year for the combined business after a three-year integration period. The deal should grow earnings per share by about 11% this year, before takeover costs.
The Good Guys was founded in 1952 and specialises in home appliances and consumer electronics to the Australia market. The company has grown into a network of 101 stores across Australia, and has generated 2.09 billion in revenue for the 12 months ended June 20 2016.
The acquisition will increase JB Hi-Fi’s footprint to a total combined 295 stores in Australia and New Zealand.
“The Good Guys is a high quality Australian retailer with an excellent track record,” Murray says.
“We are very impressed by what the owners and management have achieved with the business since its establishment and the leading market position they have created.”