Franchise Group, Inc. has announced the completion of the transaction to acquire W.S. Badcock Corporation, a home furnishings business in the Southeast. The $575m transaction was completed with cash.
The W.S. Badcock Corporation was founded in 1904 and operates 383 stores across eight states in the Southeast. Of the 383 locations, 86 are corporate-owned and 315 are independent dealer-owned. The brand carries a full line of furniture, appliances, bedding, electronics, home office equipment, accessories and seasonal items.
“Protecting the legacy of our 117-year old family-owned business, which has been grown through five generations, our relationships with customers, vendors, dealers, employees, and our deep ties to the local communities in which we operate, have always been of utmost importance to us,” said Bill Pou, Jr., chairman of the board of W.S. Badcock Corporation.
“We wanted to find a buyer who would respect our company’s long and storied history and, in Franchise Group, we immediately recognized a management group and a company that shared our values and will help W.S. Badcock build upon the legacy created by the current family and those who preceded us.
“We are confident that we are leaving our treasured company in good hands and that this decision will help to produce a winning combination for our customers, vendors, dealers and employees.”
“A sincere thank you to the Badcock family for entrusting their 117-year legacy to Franchise Group. We are very excited to welcome the Badcock management team, employees, dealers and customers to Franchise Group,” said Brian Kahn, president and CEO of Franchise Group.
“Besides potential significant standalone earnings accretion for the company, the addition of Badcock adds scale to, and anticipated synergies with our existing home furnishings franchise concepts, which we are confident will specifically benefit American Freight and Buddy’s franchisees and customers.
“Over its long history, Badcock has allocated capital among three discrete business lines: a retail footprint consisting of 383 locations; a real estate portfolio consisting of three distribution centers, 38 retail locations, and 27 corporate and certain other locations; and a consumer credit business that currently includes approximately $550m of gross receivables.
“We look forward to partnering with Badcock’s management team in assessing their highest and best uses of capital and evaluating alternatives for certain non-core assets to rapidly de-lever Franchise Group back to our target net leverage ratio of 2-3x adjusted EBITDA.
“We also look forward to evaluating and implementing programs that may offer Badcock customers more options and greater flexibility, which we think will lead to higher revenue and profitability for Badcock dealers, similar to the process that led to improved unit economics for our Buddy’s and American Freight brands.”
