Lewis buys cash furniture retailer for R320m

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Cape Town - Lewis Stores advised shareholders on Thursday that it has acquired the entire issued ordinary share capital and all shareholders’ claims against United Furniture Outlets Proprietary Limited (UFO) for a cash amount of R320m plus any applicable interest.

Of this amount, R16m will be deferred subject to confirmation of the net asset value of UFO at the effective date, said Lewis.

UFO is an independent, local cash furniture retailer and has 30 stores. It sells furniture such as lounge, bedroom and dining room products. The company is recognised as a luxury brand with a value offering to the upper LSM 9 - 10+ consumer spectrum, according to Lewis.

Lewis Stores said the deal will enable it to improve economies of scale and provide it with a "platform to penetrate new market sectors through a wider, more exclusive product range".

"Importantly, Lewis Stores is of the view that the acquisition will diversify its offering by increasing its cash-to-credit sales ratio and facilitate access to a higher income customer market segment.

"The UFO brand and business model is scalable and offers an opportunity to extend the UFO store footprint across South Africa and into neighbouring southern African countries," said Lewis Stores.

The company said it will utilise its current cash resources to pay the purchase price due in terms of the deal, which is subject to conditions.

Lewis Group [JSE:LEW] shares were trading at R26.61 just after 10:30 on the JSE.

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