By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Audiovox has entered a definitive agreement with Thomson to acquire its consumer electronics accessory business outside Europe for $50 million plus a five-year assignment fee related to the RCA brand in the CE accessories field. The transaction is expected to close early next year.
The proposed acquisition — which includes approximately 115 employees in locations in the United States, Canada, China and Malaysia — is expected to add more than $150 million in annual sales and to add to Audiovox's 2007 earnings, according to a press release.
As part of the deal, Audiovox will acquire the rights to the RCA brand for consumer electronics accessories as well as the Recoton, Spikemaster, Ambico and Discwasher brands for use on any products. The company already owns the rights to use the Jensen, Advent, Acoustic Research and Road Gear brands for electronic hardware as part of prior acquisitions. But this latest deal will also give them the rights to use these brands on accessory products.
Thomson first announced it was looking for consumer business partners to take over its audio/video and accessories businesses in December 2005. A Thomson spokesperson told TWICE that the move to sell came from a corporate strategy to leave most of its consumer business in order to concentrate on its activities as a B to B supplier of products and services for movie studios and broadcasters. He said that Thomson's A/V assets are still on the market.
In a release announcing the deal, Audiovox's president/CEO, Pat Lavelle said, "The well-respected RCA name further strengthens our brand portfolio in consumer electronics accessories. And give us greater flexibility at the distribution level. We believe the acquisition of this business will enhance both our top and bottom line performance and create powerful marketing synergies for our organization."
Lavelle said that this deal supports Audiovox's strategy of acquiring companies that "generally operate at higher margins than electronics." He said, "This acquisition is synergistic as its product lines move through existing channels where we share many of the same customers and have strong relationships in place today. Post closing, we will still have significant financial resources and will seek to continue to grow organically and through acquisition."
This deal is only the latest in a string of acquisitions on the part of Audiovox over the past few years. Other fairly recent notable brand acquisitions include that of Code Systems; the simultaneous purchase of the Jensen, Advent and Acoustic Research hardware brands from the bankrupt Recoton; and most recently the acquisition of Terk Technologies, the exclusive provider of direct-connect antennas for XM Satellite Radio.
An Audiovox spokesperson reinforced Lavelle's statements about "synergistic" strategy, explaining that all the company's recent acquisition moves, combined with the 2004 sale of its cellphone unit, have served to further its strategy to build its brand portfolio and gain access to more areas within the market it already serves.
The Thomson spokesperson confirmed that the two companies will be exhibiting during International CES this week in Las Vegas. He said they will be announcing new products under their multiple brand names in the accessories category and new A/V products under the RCA brand can also be expected.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.