Why Harvey Norman Should Buy Dick Smith: CSLA

X

The CLSA believes there’s only one Australian company who would consider taking Dick Smith off Woolworths’ hands, and that player is Harvey Norman.

Woolworths announced yesterday Dick Smith would go up for sale following pleasing results, in a bid to align the company’s core groceries and liquor business.

On the sale, CSLA analyst David Thomas believes electronics chain Harvey Norman would benefit most from acquiring Dick Smith Electronics. He cited the company’s dominating 22% market share, strong balance sheet and its history of acquisitions.

According to The Australian, Thomas doesn’t see the move threatening overall competition in the industry. He also acknowledged Harvey Norman’s earlier claims that it won’t be opening any new stores this year, but points out perhaps Harvey would rather buy some instead.

Even though Harvey Norman’s acquisition of Clive Peeters was “disastrous”, Thomas believes a conservative approach may not accurately depict the chain’s character.

“Given its poor performance of integrating the Clive Anthony acquisition, we see this as a relief,” Thomas said in a note.

According to CSLA’s maths, if Harvey Norman was to buy DSE for $150 million, earnings could be boosted by 7%. The broker also noted any price paid to Woolworths would be immaterial.

 

Big industry player JB HiFi has so far ruled out interest as an acquisition would see stores double up in many areas.

Read: Dick Smith Closing 1 in 4 Stores, JB HiFi Ecstatic

Yesterday, company founder Dick Smith went on a xenophobic rant claiming he would rubbish any foreign buyers. I wonder how he would feel about DSE being acquired by his long time competitor?  

Leaderboard 728x90 Why Harvey Norman Should Buy Dick Smith: CSLA
Dec21 728x90 1 Why Harvey Norman Should Buy Dick Smith: CSLA
Belkin Better Together 728x90 1 Why Harvey Norman Should Buy Dick Smith: CSLA
728x90 Leaderboard UNIFI Why Harvey Norman Should Buy Dick Smith: CSLA
4SQM banner 728x90px Wave Shuffle l Why Harvey Norman Should Buy Dick Smith: CSLA
DCS 6100LH 728x90 smarthouse Why Harvey Norman Should Buy Dick Smith: CSLA
CUST CRICKET FY22 Sport Cricket Q2 V1 728x90 Why Harvey Norman Should Buy Dick Smith: CSLA
SOUL S GEAR 4SQM banner 728x90px Why Harvey Norman Should Buy Dick Smith: CSLA
Leaderboard 728x90 1 Why Harvey Norman Should Buy Dick Smith: CSLA
HAR0532 SHCHnews BT 728x90 Why Harvey Norman Should Buy Dick Smith: CSLA


YOU MAY ALSO LIKE