By Duncan Bridgeman
Friday 5th September 2003
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PRG said yesterday it had acquired Powerhouse, the third-biggest appliance retailer in Britain, for £17.2 million ($47.8 million).
"The sheer scope of it is very dramatic," ASB Securities broker Stephen Wright said.
"It is a big market for PRG if they can get it right ... on-going of course it could make or break it."
PRG shares gained good ground, up 7.9% to $2.19 at press time, as investors inhaled the news. The shares have been as high as $3.35 and as low as $1.91 over the past 12 months.
Powerhouse was placed in receivership in August but had continued to operate pending the sale of the business.
PRG chief executive Peter Halkett said the company had been investigating investment opportunities in the UK appliance sector for some time.
"We are delighted to have secured this one-off opportunity to make an acquisition of this scale, in a market as large as the UK, in an industry that we know well, and at what we consider to be an attractive price," he said in a statement.
Mr Halkett said the first task would be to reduce costs in the business and restructure the store network.
At the time of receivership, Powerhouse operated 232 stores in England and Scotland selling white and brown goods. It had turnover of £398.6 million in the year to March 2003.
Mr Wright said the deal seemed cheap-looking at the turnover and PRG should have no trouble financing the purchase price.
PRG expected to contribute further working capital to meet the future requirements of the business.
Mr Wright said the acquisition was unlikely to strain PRG's local operations but could be a drain on top management. "It's a big commitment and will no doubt take up a lot of manpower time," Mr Wright said.
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