DFS sold to private equity firm for £500m

SOFA retailer DFS, which was founded and is based in Yorkshire, has been sold for around £500m to private equity firm Advent International.

Lord Kirkham, the founder and chairman of the UK’s biggest sofa retailer, is to step down following the deal.

It is believed that Lord Kirkham will earn £300m from the deal.

Advent International plans to expand the business following the acquisition.

DFS was established 41 years ago in Doncaster and has grown to boast 74 sofa stores across the UK. The company employs more than 2,600 people.

Richard Baker, a partner at Advent and the former chief executive of Alliance Boots, will assume the role of chairman.

The deal with Advent surprised the market after Lord Kirkham had claimed recently he didn’t want to sell DFS.

Lord Kirkham said last month: “I am categorically not interested in selling the business. I don’t need the money. I am loaded.”

However, Lord Kirkham has now decided that it is time to step down as he reaches retirement age. Another factor which led to the deal was that there is no one in his family or the business who could take DFS forward.

He floated DFS in 1993 before taking the business private again for £507m in 2004. Lord Kirkham has sold his shareholding in its entirety, although he is expected to retain a financial interest in DFS in the form of vendor loan notes.

Advent plans to grow DFS through new stores and online brand development.

Andy Dawson, director of Advent International, said the company’s size and reputation as a market leader had allowed it to weather the recession.

For the year to August 1 2009, DFS’s holding company saw its earnings before interest, tax, depreciation and amortisation jump by 42.1% to £86.7m.