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Audiovox To Buy RCA A/V Business

10/16/2007 01:32:00 PM Eastern

Hauppauge, N.Y. – Audiovox has signed a definitive agreement to purchase Thomson’s RCA-brand A/V business outside Europe and the worldwide rights to the RCA brand on A/V products, excluding TVs and home phones.

The agreement follows Audiovox’s January acquisition of Thomson’s RCA-brand accessories business outside Europe for about $59 million.

With the latest announcement, Thomson will remain only in the home phone business in the U.S. consumer electronics market, where it markets GE-brand consumer phones and RCA-brand SoHo and small-business phones. A few years ago, Thomson sold the rights to the RCA brand on TVs to China’s TCL, although it retained a minority stake in RCA-TV marketer TTE (formerly known as TCL-Thomson Electronics).

Audiovox, which expects the transaction to close by Dec. 31, will pay $19.7 million plus an undisclosed payment to buy RCA’s A/V inventory. Audiovox will also pay a fee to Thomson for five years based on the RCA brand’s sales performance, a spokesman said. Audiovox declined to comment on whether RCA’s Indianapolis operations will be moved to Hauppauge, but in a prepared statement, Audiovox president/CEO Patrick Lavelle said the “acquisition is in line with our announced M&A strategy of adding synergistic businesses to our core and leveraging existing overhead to assimilate them while adding minimal additional operational expenses."

 

Lavelle, attending the CEA Industry Summit in Coronado, Calif., told TWICE that based on the success of the RCA accessories brand since the acquisition, the company saw great opportunity in further consolidating the brand. Last week, Audiovox reported a profitable fiscal second quarter, driven primarily by strong accessories sales.

In a conference call with analysts last week, Lavelle said Audiovox is also interested in entering the custom installation business, perhaps through another acquisition. “We are also looking at the possibility of doing something in the CEDIA channel, in home installation type products,” he said at the time.

The RCA A/V business generates about $150 million in annual sales, and Audiovox said it will be able to generate additional income from licensing the RCA name. Rights to the RCA name will apply to such products as DVD players, CD players, GPS, portable DVD, DVD recorders, HD-DVD and Blu-ray players, digital cameras, camcorders “and other AV” products, a spokesman said. Currently RCA markets such A/V products in the U.S. as mini systems, HTiBs, MP3 players, digital camcorders, DVD players, and kitchen electronics.

The planned acquisition is just the latest in a series of brand acquisitions by Audiovox. In 2002, the company bought security supplier Code-Alarm. In July 2003, Audiovox bought Recoton’s electronics business, which included the Jensen, Acoustic Research, Advent, Phase Linear, and Road Gear brands. At around the same time, Thomson bought Recoton’s accessories business, which included the Acoustic Research, Advent, and Jensen brands as well as the Discwasher, Ambicom Spikemaseter and Recoton brands.

In 2004, Audiovox bought Terk, an antenna and accessories brand. In January, Audiovox completed its acquisition of Thomson's America's consumer electronics accessory business for about $59 million. The deal gave Audiovox the rights to the RCA brand for consumer electronics accessories. Audiovox also has rights to the Recoton, Spikemaster, Ambico and Discwasher brands for use on any products and the Jensen, Advent, Acoustic Research and Road Gear brands for electronics products.

Audioivox’s most recent acquisition was European accessories supplier Oehlbach of Germany, a maker of cables and connectors.