JOHANNESBURG – On Thursday morning, Lewis Stores advised shareholders that it had acquired the entire issued ordinary share capital and all shareholders’ claims against United Furniture Outlets Proprietary Limited (UFO) for a large cash amount of R32 million.
Of this amount, the amount of R16 million will be deferred subject to confirmation of the net asset value of UFO at the effective date, Lewis said.
UFO is an independent, local cash furniture retail chain with 30 retail stores. The retailer sells furniture such as bedroom, dining room and lounge products. It is recignised as a luxury brand with a value offering to the upper LSM 9 – 10+ consumer spectrum, that is according to Lewis.
The deal will enable Lewis Store to improve economies of scale and provide it with a platform to penetrate new market sectors through a wider, more exclusive product range, Lewis Stores said.
“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,” they added.
Lewis Stores also added that “The UFO brand and business model is scalable and offers an opportunity to extend the UFO store footprint across South African countries.” Lewis said it will use its current cash resources to pay the purchase price due in terms of the deal.