JB Hi-Fi set to buy The Good Guys

Electronics retailer JB Hi-Fi is on course to purchase The Good Guys next week in a deal expected to fetch between $850m and $900m.

The competition watchdog recently cleared a path for the acquisition and fund managers are bracing for a $300m raise to fund the purchase, as first reported on The Australian’s BusinessNow blog.

DataRoom flagged the potential equity raise last month. It is understood Macquarie, advisers to JB Hi-Fi, will execute the raise with investor sources betting the deal will be struck at a narrow discount given the stock’s 29.5 per cent rally over the past three months.

News of the company’s much anticipated acquisition of The Good Guys, which is principally controlled by the wealthy Muir family, comes as a forensic examination in to the demise of JB Hi-Fi’s former competitor, Dick Smith, moves into the law courts. Former executives at the well-known brand were quizzed in NSW’s Supreme Court today about stock levels and new store openings prior to the chain’s collapse in January.

Dick Smith’s exit from the market is widely perceived to have benefited JB Hi-Fi, which recently posted an 11.4 per cent rise in full-year profit on the back of improved computer sales.