In major news on Australian stocks, Nick Scali Limited (AU:NCK) halted its share trading on Wednesday to raise AU$60 million to fund its expansion in the UK market. The company announced the acquisition of Anglia Home Furnishings Limited, trading as Fabb Furniture, for AU$6.7 million. This acquisition is backed by institutional placement and a shareholder share purchase plan.
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Year-to-date. NCK stock has gained over 13% in trading. In February, Nick Scali shares jumped around 20% in a single-day session after the company released its half-yearly results for FY24.
With a history spanning over 60 years, Nick Scali Furniture is the leading importer of household furniture and related accessories in Australia and New Zealand.
Nick Scali’s UK Expansion
Nick Scali’s Fabbb Furniture acquisition marks its entry into the UK market. Following the acquisition, the company plans to make additional investments in the current Fabb Furniture network to introduce the Nick Scali brand in the UK as part of its growth strategy. The company plans to refurbish and rebrand existing stores and set up a new distribution centre and new stores.
Later on, the rebranded store network will feature the Nick Scali product range, taking advantage of the company’s purchasing influence and supply chain capabilities.
The acquisition is expected to be finalized in mid-May, depending on necessary approvals.
Funding of Nick Scali’s Fabb Furniture Deal
Nick Scali aims to secure AU$46 million through an underwritten institutional placement. It will also raise an additional AU$4 million through a conditional placement to an entity linked with its CEO, Anthony Scali. This transaction will be contingent upon shareholder approval. The placement to raise AU$50 million will be executed at AU$13.25 per new share.
Additionally, the company will invite qualified existing shareholders to participate in a non-underwritten share purchase plan (SPP), aimed at raising up to AU$10.0 million.
Is Nick Scali a Good Investment?
On TipRanks, NCK stock is rated a Moderate Buy, backed by three Buys, one Hold, and one Sell recommendation. The Nick Scali share price target is AU$12.14, which implies a downside of 14% from the current trading levels.
