JB Hi-Fi just paid $870 million cash for The Good Guys


Australian electronics retailer JB Hi-Fi has acquired home appliance chain The Good Guys for $870 million cash.

“The acquisition is a very attractive strategic opportunity for JB Hi-Fi since The Good Guys is a highly complementary business which is aligned with our management philosophy and significantly enhances our offering in the $4.6 billion home appliances market,” said JB Hi-Fi chief executive Richard Murray.

JB Hi-Fi underwent a trading halt on the ASX this morning and announced the deal, expected to be completed late this year or early 2017.

The Good Guys’ 101 stores will take the total JB Hi-FI network to 295 stores across Australia and New Zealand. Each brand will be retained with its own support offices and go-to-market strategies, although JB Hi-Fi cited $15 to $20 million net synergies per year.

Murray said that The Good Guys’ chief executive Michael Ford would stay on to lead the chain into the new ownership regime.

The Good Guys was established in 1952 as Mighty Muirs, and boasted $2.09 billion in revenue and $74.2 million in pro forma normalised EBIT for the year ending June 30, 2016. The retailer has an appliances focus, ranging from refrigerators down to handheld electronics, while JB Hi-Fi runs a prominent entertainment and computing retail business, along with a growing IT services arm.

JB Hi-Fi raked in $3.95 billion of revenue for the 2016 financial year, up 8.3 per cent from the previous year, while its big-name rival Dick Smith shut its doors. JB Hi-Fi’s share price had risen from $18.58 a year ago to $28.85 as of close of trading yesterday.

Speculation had swirled for several months about a JB Hi-Fi acquisition, with even the ACCC preemptively announcing in August that it would not block such a deal. However, The Good Guys continued to plough ahead with plans for an IPO while JB Hi-Fi even quelled merger speculation as late as last week.