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This article is from the Australian Financial Review. Click here for the original article.
Quadrant Private Equity-backed Amart Furniture has snapped up rival Freedom Furniture to create a retailing giant with $1 billion in sales that could list on the ASX as soon as next year.
The combined businesses will continue to operate as standalone brands, although a name change is likely ahead of any possible public float. The larger group will operate 126 stores across Australia and New Zealand with 2200 staff and more than $100 million in annual earnings.
Quadrant appointed Macquarie Capital in early March to find a buyer for Amart, which sells furniture including sofas, dining room sets and beds at the affordable end of the market. That same week, Freedom’s owners Greenlit Brands drafted investment bank Jarden to also pursue a sale following a multi-year turnaround.
Amart was founded in 1970 by Queensland billionaire John Van Lieshout and now has 66 stores across Australia in large-format sites.
Freedom, founded in 1981, has 60 stores in Australia and New Zealand plus six distribution centres. It offers a wider range of products across sofas, bedroom, outdoor, office and kitchen, plus soft furnishings such as rugs and cushions.
Lee Chadwick, Amart’s chief executive for the past decade, will lead the bigger group. He told The Australian Financial Review that the two brands offer distinct propositions, and there are plans to grow store numbers.
“Our intent is to keep these businesses completely separate. The magic is in the backend. We think the growth opportunity is huge,” he said.
Freedom could expand to an 80- to 100-store network, with Amart targeting 100 stores.
While there was an opportunity for an initial public offering, Quadrant was “not rushing for the door”, Chadwick added. Amart and Freedom compete with ASX-listed rivals Nick Scali and Harvey Norman.
Chris Hadley, chairman of Quadrant and Amart, said the combination of the two retailers made strategic and commercial sense.
“Freedom is an iconic furniture brand across Australia and New Zealand. The combination with Amart will enhance the product range we can offer customers.”
Under the deal with Quadrant, Freedom chief executive Blaine Callard will still run that business. Callard spent 24 years with Harvey Norman, where he helped turn around the retailer’s operations in Ireland. He joined Freedom with a similar remit in 2019.
“Freedom’s journey of transformation and brand renewal has delivered significant momentum thanks to our team and loyal customers,” Callard said.
Freedom is now highly profitable and on track for $20 million of earnings before interest, tax, depreciation and amortisation this year and sales of $410 million. Amart is targeting about $600 million in sales and $90 million in earnings.
Greenlit was spun out of its former troubled parent group Steinhoff International Holdings following a major accounting scandal in 2018. It has sought to sell Freedom several times along with the rest of its portfolio, and after the Amart deal it now only holds Fantastic Furniture.
In 2021, Greenlit sold sofa retailer Plush to Nick Scali, and Snooze was offloaded to billionaire Larry Kestelman’s Queens Lane Capital in 2023.
Chadwick said Amart was enjoying an uptick in sales as the end-of-financial-year sales kick in across the sector. “Consumers still have more to give, and they are seeing some green shoots.”