JB Hi-Fi is still in the running to buy the Good Guys

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JB Hi-Fi has confirmed it is still working on a deal to buy homewares chain the Good Guys.

“JB Hi-Fi remains in the sale process and continues discussions with the Good Guys in regard to a potential acquisition,” the consumer electronics retailer told the ASX.

However, JB Hi-Fi says no decision has been made and nor has it entered into any agreement.

“JB Hi-Fi understands that the Good Guys continues to assess an IPO on the ASX,” the company said.

The company was responding to reports that JB Hi-Fi will soon launch a $300 million equity raising to fund the acquisition of the Good Guys.

“The Richard Murray-led company is expected to pay between $850 million and $900 million for the acquisition which would significantly expand its footprint,” sources told Street Talk in the Australian Financial Review.

The consumer watchdog the ACCC (Australian Competition and Consumer Commission) has decided not to oppose JB Hi-Fi’s possible acquisition of the Good Guys stores.

JB Hi-Fi has traditionally focused on selling consumer electronics while the Good Guys has mostly focused on whitegoods and other home appliances.

A JB Hi-Fi deal with the Good Guys would instantly create a business with sales of almost $6 billion and almost 300 stores.

There are also reports of interest from private equity groups and Steinhoff International, the owners of Freedom Furniture stores.

The Good Guys, as well as talking to JB Hi-Fi, is also moving toward and IPO, expected to value the chain at between $800 million and $1 billion.

The Good Guys, controlled by the Muir family in Victoria, in July bought back the 56 joint venture stores it had with local managers in preparation for an IPO.

The company, with annual sales of $2 billion and staff of 3500, can now go to a float with 101 fully-owned stores, plus any it launches between now and listing.

Last month JB Hi-Fi posted an 11.48% rise in full year net profit to $152.18 million, helped by better computer sales following the closure of Dick Smith stores.

Dick Smith went into administration in January and its last day of trading was May 3. All its store closed but the online name is now owned by Kogan.com.

JB Hi-Fi now has 194 stores in Australia and New Zealand after opening nine new stores and closing two in 2016. The company expects to open seven new stores this year.

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