MFI buys Sofa Workshop for £12.25m

By Our City Staff
Tuesday 05 November 2002 01:00

MFI Furniture has bought Sofa Workshop for £12.25m in a deal that is set to net the privately owned group's founder, Andrew Cussons, £6m.

The company, which is known for its ready-to-assemble furniture, has been trialling Sofa Workshop's products in eight of its 192 out-of-town stores since February. "Upholstery is a £2.6bn market and Sofa Workshop will allow us to accelerate our rollout into this market," MFI's chief executive, John Hancock, said yesterday.

Sofa Workshop was founded in 1985 by Mr Cussons with venture-capital backing. The group, which has more than 20 stores, including seven in London, made pre-tax profits of £1.2m on turnover of £33.4m in the year to 30 December. It twice considered floating on the London Stock Exchange in the 1990s, and is still 40 per cent-owned by the venture-capital backers Piper Private Equity.

Shares in MFI closed down 2p at 130p yesterday. They fell 17 per cent last week after its smaller rival Homestyle said it had been challenged by Customs and Excise over the amount of tax it paid on warranties sold with goods. Homestyle said it could face a bill of up to £23.2m, prompting analysts to warn that MFI could face a similar charge of about £18m.

However, an MFI spokeswoman said: "This is a hypothetical issue ... MFI has received no challenge from Customs and Excise." She also noted MFI's joint-brokers, Deutsche and Merrill Lynch, had estimated the company's potential liability at £5m to £10m.

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