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Findel pounces on EHR assets

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Home shopping company Findel has paid £34 million for several businesses from rival European Home Retail after the latter was placed into administration on Friday.

Findel acquired online sports retailer Kitbag, gifts and gadgets web site iwantoneofthose.com, network marketing company Kleeneze and the 40 per cent of Farm Hampers it did not own already.

Findel’s new businesses — which had unaudited revenues of £113 million in the year to April 30 — became available after European Home Retail was forced to call in the receivers on Friday when banker HBoS rejected a final proposal to cover a funding shortfall.

Findel chief executive officer Patrick Jolly said: ‘These acquisitions are directly in line with our stated strategy to grow our home shopping business profitably though bolt-on acquisitions - We have identified substantial opportunities for both cost and revenue synergies, which will be realised over the medium term.’

In a statement, European Home Retail said that, following the suspension of its shares on August 23, the company had made ‘several funding proposals’ to its bankers, but thee had all been rejected.

Analysts welcomed the deal and Numis called it ‘exactly on strategy’ for Findel. It added £3 million to £4 million to its profit forecast for the year to March 2008 - giving £65.5 million - and said it would revise its target share price up from 545p to ‘around 700p’.

Seymour Pierce analyst Richard Ratner said that the news that European Home Retail had been placed in receivership ‘was no surprise’, because the business owed HBoS £30 million already for a number of acquisitions over the past couple of years.

On Findel, Ratner added that the deal ‘could turn out to be a very cheap purchase’ and agreed that the businesses would add profit of ‘around £3 million’ in the next financial year.

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