Mike Ashley could be about to make the leap from sportswear to sofa retailing with yet another takeover deal, this time of the online furniture specialist Sofa.com.
The Sports Direct founder has been on a buying spree over the past year, snapping up struggling retail chains including House of Fraser and the bike specialist Evans Cycles amid a high street crisis. He is also currently in the running to acquire the collapsed entertainment chain HMV.
The tycoon’s latest target is the loss-making Sofa.com, which was put up for sale recently. Ashley is thought to be keen on adding the business, which has concessions in eight House of Fraser stores, to his high street empire.
The maverick businessman is pitted against the stock market-listed sofa retailer ScS Group in the final round of bidding. ScS confirmed it was in discussions regarding a potential acquisition of the “business and assets” of Sofa.com, which include nine showrooms and a website.
“There can be no certainty that a transaction will be concluded and a further announcement will be made in due course,” the company said in a stock exchange announcement.
The consultancy firm KPMG, which is handling the auction on behalf of Sofa.com’s owner, LGT European Capital, is expected to finalise a deal in the coming days, according to Sky News. It is unclear how much either Ashley or ScS were prepared to pay to buy Sofa.com.
Furniture retailers have been struggling over the past 12 months as the continued uncertainty around Brexit erodes consumer confidence. Demand for big ticket purchases such as sofas has also been hit by a faltering housing market and a shift to renting rather than owning homes.
The most recent set of accounts filed at Companies House show Sofa.com, which has a factory in Poznań, Poland, made a loss of nearly £10m on sales of £27.6m in the year to 28 February 2018. The company’s product range spans sofas, armchairs and beds.
Sports Direct snapped up the stricken House of Fraser chain for £90m but is still finalising how many of its 59 stores will continue to trade. To date it has made deals on 37 stores, with Ashley also acquiring the landmark Frasers building in Glasgow for £95m.
LGT became the majority shareholder in Sofa.com last April, with the business previously having been owned by CBPE, a private equity firm.