DFS Furniture PLC (LON:DFS) has snapped up struggling rival Sofology in a move to strengthen its position in the UK furniture market.
Sofology posted a loss of £8.6mln in 2016 on sales of £143mln after a rebrand and higher costs due to the pound’s weakness.
DFS is paying £25mln for the privately owned group, which has 37 stores but is best known for its online presence.
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No shop closures are planned at either chain, with Sofology’s management staying on to run the business.
An estimated £4mln of savings will come from combined purchasing of advertising, interest-free-credit, upholstery and other services such as the more efficient use of the van fleet. One-off integration costs will amount to £5mln over five years.
DFS, which also announced a new £230mln credit facility with six banks, said it will pay the consideration out of its own resources.
Ian Filby, chief executive, added that although the UK furniture retail market continues to be very challenging, it will still make strategic acquisitions when the opportunity arises.
“Sofology's distinctive market position is a good fit with our existing brands.”
DFS shares rose 3% to 221p.