La-Z-Boy to acquire Ladd Furniture for 0.46 times revenue

Weekly Corporate Growth Report, Oct 11, 1999

The Deal: La-Z-Boy Inc. has agreed to acquire Ladd Furniture Inc. for $299 million and the assumption of $102 million in debt. The acquisition will make La-Z-Boy the largest publicly-traded residential furniture manufacturer with $2 billion in revenue. Ladd shareholders will receive 1.18 shares of La-Z-Boy stock for each Ladd common 'share. The price, $24.34 per share, represents an 18.0% premium for Ladd shareholders. La-Z-Boy expects the transaction to generate cost and revenue synergies within the first year. On the news, Ladd rose 75 cents, or 3.7%, to $21.25/share, while La-Z-Boy fell $1.3125, or 6.4%, to $19.9375/share.

Discussion: Ladd is one of North America's largest residential furniture makers and one of the world's leading providers of residential furniture for the hospitality, assisted-living, and government markets. The company markets its products under brand names such as American Drew, Barclay, Clayton Marcus, Hickory Mark, Lea, and Pilliod. It operates 22 manufacturing facilities in eight states. La-Z-Boy is the country's leading manufacturer of residential and business furniture. It sells its products through a licensed network of 285 stores, 300 in-store galleries, and furniture retailers. The company operates 34 manufacturing facilities in the U.S., Canada, and Europe.

The acquisition will strengthen La-Z-Boy's leading position in upholstery and case goods and will enable the company to expand into children's furniture and contract sales to hotels and healthcare facilities.