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Hooker Furniture to purchase Shenandoah for $40m

Published 11 September 2017

Hooker Furniture has signed a definitive agreement to buy upholstery manufacturer, Shenandoah, for a purchase price of $40m.

The acquisition agreement includes substantially all of the assets and certain liabilities of Shenandoah, which has plants in Valdese and Mt. Airy, N.C. and Martinsville, Va. Shenandoah is well-positioned as a supplier to what is known in the furniture industry as the lifestyle specialty retail distribution channel, which offers furnishings and décor in the upper-medium price points, both in brick and mortar stores and online.

“Shenandoah is a successful, growing, profitable company focused in a channel of distribution that is winning at retail, in which we are currently under-represented,” said Paul B. Toms Jr, chairman and chief executive officer of Hooker.

“Lifestyle specialty furniture stores are gaining market share and doing well with multiple demographic groups. For that channel, domestically-produced, customizable upholstery is extremely viable and preferred by the end consumer who shops there,” he said.

The $40 million purchase price consists of $32 million in cash, of which approximately $12 million is expected to be in the form of additional bank debt, and $8 million in newly issued HOFT common shares, the company said. The cash portion of the purchase price is subject to customary working capital adjustments.  “We are continuing to leverage the financial strength of the company to boost revenues and earnings both organically and by acquisition, as we target growth in channels of distribution that are winning at retail,” Toms said. As an S Corp, Shenandoah earned $8 million in pretax income in its fiscal year end December 31, 2016. 

“We expect the acquisition to be accretive to earnings in the first full fiscal year, which will start January 29, 2018,” Toms said. “Short-term, we expect a nominal reduction per share to earnings for the balance of fiscal year 2018 due to the timing of the acquisition in our fiscal year, and some short-term additional expenses related to the acquisition.”

Shenandoah is expected to operate as an autonomous, stand-alone business, led by veteran executives Candace Payne, Shenandoah’s current president, Phil Payne, Shenandoah’s current executive vice president and their current management team. “No changes to Shenandoah’s operations are anticipated,” Toms said. “Our goal is that the acquisition be seamless to customers, employees and suppliers,” he said.

“We have known the Hooker family and management team for years, since both of our businesses were founded by our families in Martinsville, Virginia,” said Candace Payne, president of Shenandoah. “We’re excited about partnering with a company with the integrity level of Hooker Furniture. We will continue to operate as a family-run business, just as we are today, knowing we have the full support of the Hooker Furniture team.”

“Shenandoah started in Martinsville, and we have known and admired GC Huddle, Candace and the team they built for years,” said Toms. “We have extremely high regard for them personally and professionally.” Hooker expects the acquisition to close in its third fiscal quarter which ends October 31, 2017, subject to among other things, third party consents and other customary closing conditions.  The transaction does not require approval by Hooker’s shareholders.



Source: Company Press Release