Hooker Furniture Acquires Shenandoah in $40 Million Deal

September 8, 2017  by Larry Thomas in Acquisition, Business Strategy, Industry   

The $40 million deal includes substantially all of the assets and certain liabilities of Shenandoah, which has plants in Valdese and Mt. Airy, N.C. and Martinsville, Va.

Hooker Furniture officials said Shenandoah is well-positioned as a supplier to lifestyle specialty retailers, and offers furnishings and décor in the upper-medium price points to brick-and-mortar stores and online.

"Shenandoah is a successful, growing, profitable company focused in a channel of distribution that is winning at retail, in which we are currently under-represented," said Paul Toms Jr., chairman and CEO of Hooker. "Lifestyle specialty furniture stores are gaining market share and doing well with multiple demographic groups. For that channel, domestically-produced, customizable upholstery is extremely viable and preferred by the end consumer who shops there."

The purchase price consists of $32 million in cash, of which approximately $12 million is expected to be in the form of additional bank debt, and $8 million in newly issued Hooker Furniture common shares, the company said. The cash portion of the purchase price is subject to customary working capital adjustments.

 "We are continuing to leverage the financial strength of the company to boost revenues and earnings both organically and by acquisition, as we target growth in channels of distribution that are winning at retail," Toms said.

Officials said Shenandoah is expected to operate as an autonomous, stand-alone business, led by veteran executives Candace Payne, Shenandoah's current president, Phil Payne, Shenandoah's current executive vice president, and their current management team.

 "No changes to Shenandoah's operations are anticipated," Toms said. "Our goal is that the acquisition be seamless to customers, employees and suppliers."

"We have known the Hooker family and management team for years, since both of our businesses were founded by our families in Martinsville, Virginia," said Candace Payne."We're excited about partnering with a company with the integrity level of Hooker Furniture. We will continue to operate as a family-run business, just as we are today, knowing we have the full support of the Hooker Furniture team."

Toms said he expects the acquisition will be accretive to earnings beginning with the next fiscal year, which starts Jan. 29. The sale, which does not require the approval of Hooker Furniture shareholders, is expected to close in the third fiscal quarter, which ends Oct, 31.