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Italian furniture group Poltronesofà is to buy sofa and flooring retailer ScS as it enters the UK for the first time, a deal that sent shares in the chain up more than 60 per cent in early London trading.
Under the deal, which gives ScS an equity value of £99.4mn, Poltronesofà will pay 280p per share representing a 66 per cent premium to ScS’s closing price on Monday. Of this 270p will be paid in cash with the remainder paid as a final dividend for the year ending July 2023.
The Italian group, which is making the acquisition from cash reserves, said that the deal comes after the company “decided to continue its geographic growth”.
“As the next step of Poltronesofà’s pan-European expansion, the acquisition represents the best opportunity for Poltronesofà to enter the United Kingdom market of upholstery products,” said chief executive Renzo Ricci.
Poltronesofà currently has 167 stores in Italy, 106 stores in France and 27 stores across the rest of Europe. The acquisition will add a further 100 UK ScS stores to the Poltronesofà group along with the UK retailer’s more than 1,700 employees.
The ScS board has unanimously recommended the deal that Alan Smith, non-executive chair of ScS, said “comes at an attractive valuation”. He added it “will bring significant benefits to ScS through its broad industry expertise in addition to providing the necessary capital that would accelerate our current strategy”.
Poltronesofà is well known in Italy for its advertisements in which it promotes seemingly perennial discounts on its products.
However in 2021 the group was fined €1mn by Italy’s competition watchdog for misleading advertising, with the regulator saying the details of its ads misled customers on the discounts the retailer applied across certain periods in 2020. This followed an earlier fine of €500,000 in 2014, also for misleading advertising.
Goldman Sachs is advising Poltronesofà on the deal while Shore Capital is acting as financial adviser to ScS. Cerezzola Limited, a wholly-owned subsidiary of Poltronesofà, is the company being used to acquire ScS.
