Real, or a ploy to try and set up a higher price from trade buyers?
The owners of appliances retailer The Good Guys let it be known yesterday that the company is pressing ahead with plans for an $800 million stockmarket float, despite interest from JB Hi-Fi (JBH), Harvey Norman (HVN) and possibly several lesser known groups.
Good Guys chairman Andrew Muir issued a statement saying he had appointed Credit Suisse, Goldman Sachs and UBS as joint lead managers for a planned initial public offer.
But he also said he would also consider any alternate ownership proposals that emerged, thus covering himself in the event of real interest from the trade.
"The Good Guys has appointed Credit Suisse, Goldman Sachs and UBS as Joint Lead Managers to support its planned initial public offer and listing on the Australian Securities Exchange with the oversight of Helfen Corporate Advisory as independent financial adviser. The Good Guys will also consider any alternate ownership proposals that emerge,” the brief statement read.
JB Hi-Fi chief executive Richard Murray signalled last week that his company was in preliminary discussions to buy The Good Guys.
Other potential bidders were named in various media reports as Steinhoff International of South Africa, which owns furniture chain Freedom, and private equity firms Bain Capital, TPG and KKR.
And Harvey Norman chairman Gerry Harvey also suggested he may be interested, and talked about a price around $900 million.
Media reports say Mr Muir has been tidying up The Good Guys, buying out partners in some of its outlets, revamping computer, merchandising and other systems.
Fairfax Media claims Mr Muir is more interested in a trade sale than a market float because it would enable the Muir family to exit the business cleanly and fully crystallise value.
The Good Guys has annual sales around $2 billion and market-leading positions in categories such as white goods, cooking, small appliances and home entertainment.
It has forecast earnings before interest tax depreciation and amortisation around $110 million, and could be worth $800 million to $900 million.
But to a trade buyer such as JB Hi-Fi or Harvey Norman, the company has a higher value because of synergies in ordering, inventory control, real estate rationalisation, merchandising and marketing.
But if the family heads down the trade sale route, it will be the ACCC that will decide the success of any bid.
Investors played a wary hand in the wake of the reports yesterday – JB Hi Fi shares fell 2.3% to $23.32, while Harvey Norman shares were also off 2.3% at $4.55.
