Hauppauge, N.Y. — Mobile and consumer electronics maker Audiovox said today its subsidiary, Audiovox Electronics, has signed a letter of intent to acquire certain assets of Terk Technologies.
Price for the transaction is $13.6 million, plus a debenture based on achieving future revenue targets.
The deal, which is expected to close by the end of this month, brings together publicly-owned Audiovox, which posted annual CE, mobile and sound products sales of $518 million in 2003, and the privately-held Terk, which offers indoor/outdoor TV antennas, AM/FM antennas, satellite dishes and accessories, Sirius and XM satellite radio antennas, cellular antennas, installation hardware, modulators and switches and Leapfrog wireless multiroom A/V distribution and multiroom control systems.
Terk has an agreement in place to provide existing and develop future car stereo aftermarket products for XM.
The companies anticipate, based on due diligence, that Terk’s net sales for the year ended Dec. 31, 2004 will be approximately $50 million. Audiovox reported sales of CE, mobile and sound products through the end of last August were $417.5 million. This compares with $327.4 million in the same period the previous year.
Commenting on the deal, John Shalam, chairman, president and CEO of Audiovox, said, “The proposed acquisition of Terk marks our first transaction since the sale of our wireless business to UTStarcom. Terk brings significant expertise in the specialized satellite radio industry, which we have identified as a fast-growth high-tech market, and we believe it will serve to strengthen our position for future growth in that segment.”
Pat Lavelle, president/CEO of the Audiovox Electronics subsidiary, said, “This purchase is yet another step we are taking to further expand our portfolio of technology driven products. It is synergistic to our existing distribution channels as well as internal operations. We already enjoy a leading market position in satellite radio and with the addition of Terk, believe we have further strengthened that position.”
In addition to the Terk branded products, Audiovox will also assume the exclusive distribution rights in the United States for Vogel’s line of high-end LCD and plasma TV mounting systems.
The consummation of the Terk purchase is subject to a number of conditions, including completion of a definitive agreement and fulfilling due diligence and other terms and conditions customary or applicable to this transaction.
Terk, founded in 1985 by Neil Terk, began primarily as a maker and supplier of indoor AM television antennas and products that ran the gamut from rooftop to set-top solutions. Founder Terk, who served as president until 2001, died in 2003. Steve Roth assumed the role of CEO in 2001 for the Commack, N.Y.-based company, when Terk became chairman.
Over the years, Terk has been known for creating a CE electronics category where there had been none previously, with emphasis on developing problem-solving accessories that complement consumer lifestyles. From Terk’s first antenna in 1987, the Pi AM/FM model, to extension into other correlative product areas, company success was said by industry pundits to have motivated the accessories business to improve standards for products — on everything from design and engineering to packaging and merchandising.
Audiovox, started in 1965 by Shalam, began operation in the car-radio distribution business. The company’s mobile electronics portfolio has been expanded to now include car sound, mobile video, vehicle security, remote start, and tracking and navigation products. Its CE line-up, which followed mobile, currently includes home and portable audio video products, and two-way radio.
In 1984, Audiovox added a cellular business, including vehicle-installed cellular telephones, as a natural expansion of its automotive aftermarket business. However, this past October, the company sold its cellular subsidiary, called Audiovox Communications, to UTStarcom for $165.1 million.
In 2003, Audiovox Electronics, the company’s car and home electronics subsidiary, purchased Recoton’s home and auto CE business, paying $40 million, plus the assumption of $5 million in debt for Recoton’s non-accessories business in the United States and Europe.