HTL Acquisition of Domicil - 30 Sep 05 @1.29

HTL requested for a mid-day suspension on the trading of its shares followed by announcement of the acquisition of Domicil.

My first reaction is, why the acquisition??? I thought they should be busy increasing its sales in leather and tannery to filled up the increased capacity in China!

Domicil is a leading luxury home furniture brand in Germany with a sales of EUR 22.7M and Adjusted EBITDA of 1.4M. What "Adjusted EBITDA" is that?? Intercompany rental?? Without the adjustment, it is in a loss position of EUR118K. The acquisition costs EUR19M compared with net asset of EUR9M and funding from bank loans. Extra $$ paid for global IP rights - a whopping EUR10M? Bank loans again?? I though you should be reducing your gearing? The sales of Docimil had been quite flat from FY02 to 04. Hey, I don't like this deal!

This acqusition remind me of the loss HTL suffered when it went into retailing few years back. I hope it is not history in repeat.

Probably there will not much market reaction to this deal when open for trading on Monday. If this acqusition does not prove to be a wise one over the next few quarters, I will be looking to reduce my stake and divest to other companies. How about Koda? Will try to do a detail study sometime...