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Warehouse Group buys Noel Leeming

Warehouse Group, the country's biggest listed retailer, is buying consumer electronics and appliance chain Noel Leeming Group for $65 million from Gresham Private Equity.

The acquisition will be completed on Monday and is expected to contribute between $4m and $6m to earnings before interest and tax in the six months ended January 27, 2013.

The 92 Noel Leeming stores will be operated as a separate trading division.

"We're impressed with the performance of Noel Leeming Group over the past three years with strong management leading a talented team in the specialist consumer electronics and home appliance sector," Warehouse Group chief executive Mark Powell said.

"We believe in the future growth of this retail sector, and are pleased that the current team have agreed to stay with the business."

Last month, the retailer affirmed its view that next year's earnings will beat the 2012 result and said it sees signs of growth in consumer spending. Warehouse increased first-quarter sales 1.9 per cent to $377.3m on the strength of its stationery unit.

The company will fund the deal through its existing debt facilities.

Noel Leeming narrowed its annual loss to $615,000 in the year ended March 31, from a loss of $3 million a year earlier, according to financial statements lodged with the Companies Office.

Revenue rose 7.6 per cent to $607.8m, and operating profit jumped 45 per cent to $10.6m. Employee expenses rose 14 per cent to $60.1m from a year earlier.

The appliance chain's goodwill was $95.1m as at March 31.

Warehouse shares fell 1 per cent to $3.09 in trading on Friday and have increased 3 per cent this year.

Cameron Partners acted as an external adviser to the Warehouse board for the acquisition.