• Erin Berg

Hooker to acquire Shenandoah

The upholstery maker has two plants in N.C.

MARTINSVILLE, Va. -- Hooker Furniture Corporation plans to acquire Valdese, N.C.-based upholstery manufacturer Shenandoah Furniture for $40 million dollars.

The acquisition agreement includes substantially all of the assets and certain liabilities of Shenandoah, which has plants in Valdese and Mt. Airy, N.C., and Martinsville, Va.

"Shenandoah is a successful, growing, profitable company focused in a channel of distribution that is winning at retail, in which we are currently under-represented," said Paul B. Toms Jr., chairman and CEO of Hooker. "Lifestyle specialty furniture stores are gaining market share and doing well with multiple demographic groups. For that channel, domestically produced, customizable upholstery is extremely viable and preferred by the end consumer who shops there."
ShenandoahShenandoah is well positioned in the lifestyle specialty retail channel, according to Hooker officials.

The $40 million purchase price consists of $32 million in cash, of which approximately $12 million is expected to be in the form of additional bank debt, and $8 million in newly issued HOFT common shares, the company said. The cash portion of the purchase price is subject to customary working capital adjustments.

"We are continuing to leverage the financial strength of the company to boost revenues and earnings both organically and by acquisition, as we target growth in channels of distribution that are winning at retail," Toms said. As an S Corp, Shenandoah earned $8 million in pretax income in its fiscal year end Dec. 31, 2016.

"We expect the acquisition to be accretive to earnings in the first full fiscal year, which will start Jan. 29, 2018," Toms said. "Short-term, we expect a nominal reduction per share to earnings for the balance of fiscal year 2018 due to the timing of the acquisition in our fiscal year and some short-term additional expenses related to the acquisition."

Shenandoah is expected to operate as an autonomous, stand-alone business, led by its current president, Candace Payne; executive vice president, Phil Payne; and their management team. Toms said there are no anticipated changes to Shenandoah operations with the goal of a seamless acquisition for customers, employees and suppliers.

"We have known the Hooker family and management team for years, since both of our businesses were founded by our families in Martinsville," said Candace Payne. "We're excited about partnering with a company with the integrity level of Hooker Furniture. We will continue to operate as a family-run business, just as we are today, knowing we have the full support of the Hooker Furniture team."

Hooker expects the acquisition to close in its third fiscal quarter which ends Oct. 31.

Erin BergErin Berg | Associate Editor
EBerg@furnituretoday.com

Erin Berg is an Associate Editor for Furniture/Today. After earning her B. A. in Broadcast Journalism from the University of Southern California, Erin began her career in marketing where she served clients in a wide variety of industries from film and television entertainment to aviation. Erin lived in Italy and four different states before landing in North Carolina in 2009.

Erin can be reached at EBerg@furnituretoday.com or at 336-605-1040.

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