Kitchen manufacturer Howdens has announced a £390 million deal to acquire the parent company of Pontefract-based DIY Kitchens, Ultimate Furniture Systems Limited. The transaction comprises £292.5 million in cash and £97.5 million in Howdens shares.
Strategic Move to Target Non-Trade Customers
The acquisition is a strategic move for Howdens, which has traditionally focused on trade customers. By adding DIY Kitchens to its portfolio, Howdens gains access to the consumer market through an established direct online channel. DIY Kitchens has demonstrated strong sales growth, with revenues increasing by 17% annually over the past five years, alongside attractive margins and cash generation.
Financial Details and Business Continuity
In an update to shareholders on the London Stock Exchange, Howdens reported that DIY Kitchens generated revenue of £136 million and earnings before interest and tax (Ebit) of £37 million. Under the terms of the deal, DIY Kitchens will continue to operate as a separate business, pending regulatory approvals. The transaction also includes freehold property assets valued at approximately £55 million.
CEO Comments and Future Plans
Andrew Livingston, CEO of Howdens, commented: 'Howdens' highly successful trade-only model is built around supporting solely trade customers with outstanding in-stock availability, expert local depot teams, and an end-to-end service from design through to delivery. The acquisition of DIY Kitchens, which will be operated on a standalone basis, adds a complementary, very profitable business to the group, providing access to non-trade end customers through its direct online channel with self-service planning, design, and ordering tools.'
He added: 'DIY Kitchens shares many of the characteristics that underpin Howdens' success, including well-invested manufacturing, strong vertical integration, scalable capabilities, and a deep, well-embedded entrepreneurial culture. We are excited to welcome the DIY Kitchens team to Howdens. We have great respect for the innovative business model they have built, and we look forward to supporting the business's continued growth and investing behind its next phase of development.'
DIY Kitchens Business Model
DIY Kitchens specialises in allowing customers to plan and design their own kitchen from home, with full control over the ordering process through an online platform. While it will remain primarily an online offer, Howdens has indicated that DIY Kitchens products could be displayed in a small number of Howdens showrooms in the future.
