Dusk share price (ASX:DSK) surges 9% on $28 million acquisition

The candles and home fragrance retailer announced some big news today.

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Dusk Group Ltd (ASX: DSK) shares are surging today after the company announced an acquisition.

The Dusk share price is currently trading at $3.09, up 5.8% from yesterday's closing price of $2.92.

Shortly after the market opened this morning, the share price soared to $3.20, up 9.6%.

Dusk is an Australian retailer of home fragrance products with a significant in-store and online presence.

What did Dusk announce today?

Dusk informed ASX investors that it will take over Eroma Group for $28 million.

Eroma is touted as Australia's leading supplier of candle-making inputs, including fragrance oils, waxes, packaging, and candle-making kits.

The investment will significantly boost Dusk's online presence. In the year to date, 65% of Eroma's sales have been online. In contrast, Dusk recorded just 8% of sales online in the same time frame.

The acquisition will involve a $15 million cash payment and a $13 million share placement.

These shares will be issued to all Eroma shareholders including CEO Shane McGrath, who has a 55% stake in the company.

Eroma will continue to trade as a freestanding company within the Dusk Group.

Management comment

Commenting on the acquisition, Dusk managing director and CEO Peter King said:

The acquisition enlarges and diversifies our position in the home fragrance market. It substantially increases the scale of our online operations.

The transaction affords us the opportunity to more fully vertically integrate our sourcing and distribution operations and gives us scope to share certain group resources to enhance performance of both businesses in our group.

Eroma will continue to be led by a strong and focussed management team, and we are excited to welcome them to the dusk family.

Dusk share price snapshot

The Dusk share price has skyrocketed by 65% in the past 12 months. It has zoomed up by about 42% in the year to date.

Dusk commands a market capitalisation of roughly $196 million based on today's share price.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dusk Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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