Advent settles on £500m UK sofa shop deal

The global private equity firm will underwrite the acquisition of DFS with equity from its €6.6bn sixth fund while it seeks to put a debt package in place.

DFS: 'best-in-class'

Advent International has agreed to acquire UK furniture retailer DFS from store founder and 100 percent shareholder Lord Graham Kirkham. The transaction value was undisclosed, but a source close to the process confirmed it was in the region of £500 million (€575 million; $770 million).

No bank debt has yet been arranged. Advent has underwritten the deal entirely with equity and is currently in the market working to put a debt package together. The investment has been made from the €6.6 billion Global Private Equity VI, which closed in April 2008.

The business, based in Doncaster, currently operates from 74 sofa stores across the UK and employs more than 2,600 people.

Advent director Andy Dawson said the 40-year-old retail chain – best recognised for its range of sofas – had grown into a “best-in-class” business and that while it operates in “a sector which has been difficult for some retailers” DFS’ size and market position had allowed it to perform during the downturn.

Advent will bring in Richard Baker, the former chief executive officer of pharmaceutical and retail group Alliance Boots, to replace Kirkham as chairman. Baker led the merger of high street retailer Boots with Alliance Unichem in 2006 – a business which is now owned by Kohlberg Kravis Roberts. He has also held positions at Virgin Active, the health club operator, and ASDA Stores, the supermarket chain.

Baker joined Advent’s stable of operating partners in August 2009.

Kirkham will continue to hold a financial interest in DFS, he said in a statement.

Advent was advised on the deal by Quayle Munro, Hawkpoint, Weil Gotshal and Manges, Bain and Deloitte.