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SYDNEY - Home entertainment company JB Hi-Fi Ltd plans to buy New Zealand consumer electronics chain, Hill & Stewart, for about $17.5 million.
JB Hi-Fi chief executive Richard Uechtritz said the company aimed to use the acquisition to become one of New Zealand's top three electrical retailers.
"We expect the discount positioning of JB Hi-Fi will appeal to New Zealand consumers, which, together with the Hill & Stewart business, will quickly propel the company to within the top three of electrical retailers in the company," Mr Uechtritz said.
He said the New Zealand consumer electrical market was more fragmented than Australia, and the eleven-store Auckland-based chain was well managed and successful with a great presence and strong supplier relationships.
JB Hi-Fi anticipates the proposed acquisition, to be completed on March 1, to have a neutral impact on its earnings per share for fiscal 2007.
It said the price paid would be a multiple of seven times earnings before interest and tax (EBIT) for 2006/07.
"EBIT is expected to be around $2.5m, valuing the company at approximately $17.5m," the company said.
Hill & Stewart, which sells audiovisual, whitegoods, cameras, computers and small appliance products, is expected to make more than $60m in sales in 2006/07.
JB Hi-Fi expects to open between four to five of its own new stores in Auckland in fiscal 2008.
An in-principle agreement has been struck for three JB branded outlets, including one in Auckland's central business district.
The company said there was also an opportunity to grow Hill & Stewart outside of Auckland.
Current Hill & Stewart owner and managing director Nigel Merrett will stay in his role to work with the Australian company to drive its NZ expansion.
- AAP
