Joules Group PLC (LON:JOUL) announced it has acquired Garden Trading for up to £12.5mln in cash and shares.
Already a seller on the Friends of Joules digital marketplace, Garden Trading designs its own home, garden and outdoor products available on its website or through over 1,000 stockists across the UK.
READ: Joules posts defensive interim performance; chief financial officer leaves for virtual healthcare company
The AIM-listed clothier said the acquisition strengthens its position in the home, garden & outdoor category, while the two brands have a “close cultural alignment” and share the same design-led approach inspired by the British countryside and lifestyle trends.
The retailer plans to continue the Garden Trading brand and product range, but will also leverage its design and sourcing strengths to develop a broader range of Joules-branded home, garden and outdoor products.
In the year to November 30, 2020, Garden Trading posted a 40% increase in revenue to £17mln with profit before tax of £2mln.
The acquisition is expected to be earnings accretive for Joules in the next financial year.
The firm will pay £9mln upfront, comprised of £4.5mln in cash and the rest in shares, while up to £3.5mln will be paid in cash and shares based on milestones.
Analysts at house broker Peel Hunt raised the target price to 200p from 175p and next year's profit before tax estimate by £2mln to £11mln.
"The acquisition is a great fit with Joules and, as well as allowing for the standalone growth of the Garden Trading business, will also facilitate the development of Joules ranges in the home and garden category using the expertise of the Garden Trading buying team," they noted.
Shares rose 6% to 170p on Tuesday morning.
--Adds analyst comment, shares--