DFS Furniture plc, a U.K. retailer of furniture products, on Aug. 3 said it agreed to acquire British specialist sofa retailer Sofology for an initial enterprise value of £25 million on a debt-free cash-free basis.
The deal brings to DFS' portfolio a network of 37 stores in the U.K. as well as a strong web presence that offers customers a technology-led omnichannel proposition. DFS said it expects the transaction to generate £4 million in synergies annually with the potential for further longer-term benefits.
DFS said the cost of the deal could rise. It agreed to pay seven times the underlying EBITDA generated by Sofology in the 12-month period following completion of the deal, less the £25 million consideration that would have already been paid. Sofology made an EBITDA loss of £2.7 million in the 12 months ended Dec. 31, 2016, DFS said.
In addition, DFS announced an agreement to refinance its existing borrowings, retaining its total facility size and covenants, but converting the current facilities to a new lower-cost five-year £230 million revolving credit facility structure. The new facility, maturing in July 2022, has been arranged with a group of six banks.