This was published 7 years ago

JB Hi-Fi buys The Good Guys for $870 million

JB Hi-Fi will buy rival electronics and whitegoods retailer The Good Guys for $870 million.

The company announced the long-speculated acquisition on Tuesday morning, saying it would create new opportunities for each brand to grow store numbers and market share.

"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 appliance market," JB Hi-Fi chief executive Richard Murray said.

The takeover will be funded by a $349 million equity raising, through retail and institutional entitlement offers of about 15 million new shares, and $500 million from new and existing debt facilities.

JB Hi-Fi chief Richard Murray: "The acquisition is a very attractive strategic opportunity for JB Hi-Fi." Pat Scala

Absorbing the 101-store Good Guys network will boost JB Hi-Fi's footprint to 295 stores across Australia and New Zealand.

JB Hi-Fi said combining the companies would deliver synergies of between $15 million and $20 million a year after three years, excluding implementation costs. The deal would grow earnings per share by about 11 per cent this year, before takeover costs, it said.

The Good Guys was founded in 1952 and originally traded as Mighty Muirs, after its founder Ian Muir, whose family has retained ownership of the chain. The Good Guys' CEO, Michael Ford, will continue to lead the chain under JB Hi-Fi's ownership.

The institutional entitlement offer will open on Tuesday and finish on Wednesday, followed by a retail offer opening next Wednesday, with eligible shareholders able to subscribe for one new JB Hi-Fi share at $26.20 - a 9.2 per cent discount on Monday's closing price - for every 6.6 existing shares.

The Good Guys acquisition will boost JB Hi-Fi's sales by $2 billion a year.