Speculation is growing within financial circles that JB Hi Fi may be a potential buyer to takeover Dick Smith Electronics (DSE) after Luminis Partners was secured by DSE for an advisory role. This is being perceived as a pre-emptive move by the retailer to fend off any prospective suitors.
Luminis founder Rob Murray is chairman at DSE and Metcash and also sits on the Southern Cross Media Group board. According to media reports, Luminis is working with Dick Smith to aid it with strategy and defence.
JB Hi-Fi and DSE have become even closer competitors following their recent excursions into the small appliance category. However, JB trades at about 13 times its earnings before interest, tax, depreciation and amortisation and has a $1.79 billion market value.
Dick Smith trades at between six and seven times its EBITDA and its market value has fallen since its initial public offering to about $331m. There are said to be strong synergies between JB Hi-Fi and Dick Smith, which has about 400 stores across Australasia.