Kitchen and bathroom products retailer E&S Trading acquired by JB Hi-Fi for $47.8m
JB Hi-Fi has acquired kitchen and bathroom products group E&S Trading, marking its entry into the commercial builder market. The move comes as the electronics retailer seeks growth amid margin pressure in its core businesses.
Transaction snapshot
Deal value: $47.8 million for 75% stake, option to buy remaining 25% in 2029
Deal multiples: 0.3x revenue, 9.1x EBITDA (assuming $63.7m enterprise value)
Deal type: Acquisition
Investors: JB Hi-Fi Limited
JB Hi-Fi is paying $47.8 million for a 75% stake in E&S Trading, with an option to acquire the remaining 25% in 2029. E&S Trading, founded in 1962, operates 10 showrooms in Victoria and one in Canberra. The company has annual revenues of $230 million and earnings of $7 million.
CEO Terry Smart said the acquisition provides exposure to premium home appliance customers, the bathroom category, and large commercial construction customers, as well as boutique builders and architects.
The deal aims to diversify JB Hi-Fi's business and tap into a growing market while addressing lower margins in consumer-facing categories. JB Hi-Fi's Australian stores saw a 1% sales increase in the past financial year, but this growth was supported by heavy discounting.
Despite a 16.4% drop in underlying net profit to $438.8 million for the year ended June 30, JB Hi-Fi's performance exceeded market expectations. The company announced a special dividend of 80 cents per share, along with a final dividend of $1.03, totalling $200 million in shareholder payouts.
JB Hi-Fi's shares rose 7.3% to $72.29 in early trading following the announcement. The company reported a 5.6% sales growth in its Australian stores for July, aligning with expectations.
