UK furniture retailer DFS Furniture has reached a £25m agreement to acquire specialist company Sofology in order to improve its market position.

Through the acquisition, which offers 37 Sofology stores and an online platform, DFS intends to obtain a technology-based omnichannel proposition.

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The retailer is also planning to achieve near-term potential synergy of £4m per annum, with further strategies to achieve additional long-term benefits through the optimal use of both companies' warehouse facilities and delivery fleets.

DFS Furniture CEO Ian Filby said: "While the UK furniture retail market continues to be very challenging, we remain focused on making strategic progress to strengthen our position in living room furniture.

“This acquisition represents a clear opportunity for DFS to accelerate our proven strategy of broadening our appeal, generating substantial long-term returns for shareholders underpinned by well-understood synergies.”

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"We remain focused on making strategic progress to strengthen our position in living room furniture."

Under the terms of the agreement, DFS will make an additional payment towards the acquisition one year after the completion of the deal.

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Even after the transaction is completed, the current Sofology management team will continue to oversee business operations.

Over the last 1.5 years, Sofology has invested more than £5m into technological improvements in omnichannel tracking and attribution, visualisation technology and personalised marketing content delivery.

Although Sofology reported revenues of £143m for the year ending 31 December 2016, it experienced an EBITDA loss of £2.7m.