OHKI to acquire Stax Electrical
OHKI has entered into an exclusive Heads of Agreement to purchase Stax Electrical, a successful electrical goods retail business located in Sydney, New South Wales.
Stax Electrical has operated successfully for over 18 years and supplies large corporations in the insurance industry with new for old replacement products as well as pubs, clubs and hotels.
The acquisition is highly strategic for OHKI Limited as it allows the company to purchase “name branded” electrical products at a 15% greater margin as well as significantly expanding OHKI’s range of products. Gross Margins on branded products are currently 25-30% and will increase to 35-40% plus additional rebates upon trophy sales targets being met, provided by supplier’s further increasing gross margin.
OHKI will now be able to offer customers access to over 2,500 products in addition to our own branded products. Management estimate once the purchase is completed that the combined OHKI/Stax Electrical business is expected to generate revenues of over $7,000,000 annually at a healthy profit.
OHKI Limited will acquire Stax Electrical at a competitive price and with a minimal upfront outlay, with the bulk of the business in cash and shares in OHKI Limited. The cash component will be funded by a new debt facility from one of Australia’s largest debt providers. The facility has been pre-approved and is subject to a due diligence of Stax Electrical and OHKI Limited.
The purchase price will be funded with debt and script, partly paid upon the Sale agreement being executed with the remaining balance paid in 12 months. The debt facility has been pre approved and is subject to final due diligence.
Closing of the acquisition is expected to be completed in the next 8-10 weeks. In the event the transaction closes successfully, the financial projections for OHKI Limited will increase significantly. OHKI Chairman Siimon Reynolds said “Ohki is powering. In a very short space of time they’ve hit strong numbers, built an expert board, and now bought an excellent retail operation in Stax. The pieces are coming together fast for Ohki and I expect a year of strong growth.
Stax is a key acquisition. It’s an excellent company in it’s own right, but the synergistic advantages when joined with Ohki’s online operation are formidable.”
OHKI Managing Director Lucas McEntee also said today “This transaction is a game changer for OHKI Limited. It gives us immediate scale, a massively expanded product range and better margins on name branded products. The payment terms of the acquisition are also geared around the performance of the business after settlement and the vendor is taking part of his consideration in shares in our company – which inspires confidence.”