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End of the furniture revolution? That means the XXXLutz deal at a bargain price

"40 percent discount plus an additional ten percent on everything.

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End of the furniture revolution? That means the XXXLutz deal at a bargain price

"40 percent discount plus an additional ten percent on everything." Bargain campaigns are part of everyday business at Möbelreisen XXXLutz. Now the Austrians themselves are facing a cheap deal: the chain wants to take over the online retailer Home24 for just under 230 million euros. This ends an ambitious e-commerce project that actually wanted to attack established retailers like XXXLutz.

When the company was founded in 2009, it was funded by the Samwer brothers, Rocket Internet. Their vision: The large suburban furniture stores would soon become obsolete because Home24 would take over the business online.

But even 13 years later, Home24, with sales of 615 million euros, is significantly smaller than the big chains - despite business in several European countries and a subsidiary in Brazil. Too few people want to buy furniture without seeing it first.

In addition, Home24 suffers from the fact that people rarely buy new furnishings: This means that the advertising costs per customer are comparatively high.

In view of price shocks and uncertainties, the business model of convincing customers with cheap furniture to regularly redecorate their homes is currently under additional pressure. Just a few weeks ago, CEO and co-founder Marc Appelhoff had to indefinitely postpone the declared goal of reaching one billion euros in sales.

At the same time, debts and losses increase in the crisis after the Ukraine war. Since the beginning of the year, the share has fallen from EUR 12.45 to EUR 2.50. XXXLutz exploits the weakness: The family business with sales of 5.3 billion euros pays Home24 shareholders a surcharge of 124 percent on the price of October 5th - and still only around a third of the issue price of the share from the 7.50 euros year 2018.

Looking back shows how cheap the price is: Home24 collected around 150 million euros when it went public four years ago. According to Crunchbase, investors such as Rocket Internet and Rewe had already invested 170 million euros in venture capital into the project. At the current takeover price of 230 million euros, the project has apparently burned money overall.

However, XXXLutz should not have to overcome much resistance: according to the announcement, the company has already secured 60 percent of the shares in advance. The share rose significantly - almost to the targeted takeover price. Analysts rated the takeover bid as "understandable" given the difficult situation in the industry.

The takeover is also cheap in comparison with other deals because of the price slumps in German online retailers from Zalando to Auto1: just under two years ago, at the height of the e-commerce hype, Oetker paid for Flaschenpost, a beverage delivery service limited to Germany proud billion euros.

Since then, industry experts have been critical of the development there: Under Oetker's aegis, Flaschenpost invests too little - and is increasingly unable to keep its promise to deliver within three hours.

It is still unclear whether a similar development is imminent at Home24. According to the announcement, the furniture mail-order company is to continue independently from Berlin under the previous management. A profit transfer agreement, i.e. close financial integration, is contractually excluded for three years.

Appelhoff emphasized that XXXLutz shares his vision of the company. As a partner and investor, the chain will increase "the robustness and clout in the furniture market".

XXXLutz wants to take Home24 off the stock exchange. In addition, the future is described as an "e-commerce pure player", i.e. as a pure online retailer. The own shops, in which Home24 shows its furniture, could be available as well as the home deco shops of the ailing Butlers chain, which were only purchased at the turn of the year.

Despite the emphasis on independence, further synergies from the merger with XXXLutz are indicated: Purchasing and logistics could be done together, it is said. XXXLutz belongs to one of the largest purchasing associations in the industry.

As a result, Home24 would lose important independent areas – but operate with better cost structures. So far, the Home24 management had always emphasized that it had independently optimized products and logistics for online trading.

In any case, XXXLutz gains contact with Home24 customers and a second brand through the takeover - and can probably also optimize its own online shop. It's just celebrating its nineth anniversary - with a nine percent discount.

"Everything on shares" is the daily stock exchange shot from the WELT business editorial team. Every morning from 7 a.m. with the financial journalists from WELT. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.

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