Lumber Liquidators has entered into an agreement to acquire certain assets of Sequoia Floorings relating to Sequoia’s quality control and assurance, product development and logistics operations in China.

In connection with the agreement, Lumber Liquidators expects to retain certain key Sequoia personnel in Shanghai, China and assume direct control of sourcing previously managed by Sequoia. The acquisition strengthens Lumber Liquidators’ mill direct relationships pursuant to its long-term sourcing strategy, and allows for a coordinated and efficient transition to direct servicing of mill relationships by an experienced team of quality and product development experts, the company said. Sequoia, a trading company, had provided product quality and development services on approximately 40% of the Company’s 2010 merchandise purchases, primarily those in Asia. As part of the transaction, the Company will be opening a representative office in Shanghai upon approval of its application to the Chinese government, expected to occur in October.

The acquisition agreement includes a cash outlay of approximately $5 million plus other consideration, such that the expected allocated purchase price is approximately $8 million. The Company anticipates acquisition-related expenses of approximately $0.6 million, or $0.01 per diluted share, in the third quarter of 2011. The acquisition is expected to be accretive to the business by the fourth quarter of 2011.

“One of the core components of Lumber Liquidators’ strategy and a key competitive differentiator has always been our ability to purchase products directly from mills, said Jeffrey W. Griffiths, ceo. “We are excited to launch the third phase of our sourcing initiatives with the significant expansion of direct sourcing in China. By entering into this transaction, we will be able to better control product cost and quality through our own international sourcing operations, further strengthen our value proposition and increase our competitive position. Additionally, we believe that this acquisition will allow us to expand operating margin, while at the same time provide greater flexibility in our marketing programs to help us attract consumers with aggressive opening price points. Most importantly, we look forward to working with our new Asian team and expanding our family of mills.”