The planned acquisition of MyerEmco by Harvey Electronics has been scuttled.
The stock purchase agreement, which was scheduled to close Aug. 10 following repeated delays, was terminated by MyerEmco management, which cited Harvey's failure to complete the acquisition prior to the deadline (TWICE, May 21, p. 4).
"This dragged on way too long," Jon Myer, CEO of MyerEmco, told TWICE. "It's not good for your company. The staff was up in the air too long, and we have a business to run."
The cash deal, in development since last winter, would have joined the two PRO Group members into a 19-store regional A/V and custom install chain stretching across the Mid-Atlantic states. Myer said he wasn't actively shopping the 52-year-old family business, although "it's always on sale for the right price." Harvey agreed to pay in excess of $10 million plus the assumption of debt for the 10-store dealer, which serves the greater Washington, D.C. market.
Myer said he has great respect for Harvey's management team and "felt great about the transaction," but was not informed why Harvey's owners, private-equity firm Trinity Investment Partners, repeatedly pushed back the closing. He suggested, however, that CE retail deals have become more difficult to structure given the current environment of store closings and tightened credit.
Under the plan, each chain would have retained its own brand name within existing markets, but would have been held by a new umbrella company called Harvey Electronics. MyerEmco president/COO Gary Yacoubian would have been named president of the combined business and Myer would have maintained some level of involvement with the business. "I'm 45 and not ready to retire," he said.
Looking ahead, Yacoubian said in a statement that "MyerEmco AudioVideo has never been in a stronger position to move forward and grow than it is today. Our unique custom installation/retail hybrid strategy" — in which nearly half of its retail business is installed by its custom install division — "has resonance in the D.C. market as never before, as the reality of digital convergence in the home manifests itself. Our ability to add value via our trained sales force and custom installation infrastructure has real resonance in an environment of declining average selling prices in the flat-panel TV realm."
Myer said he is relieved that the waiting is over for both business and personal reasons.
"I had mixed feelings all along about selling the family business," he said. "It felt weird."
Michael Recca, interim CEO and former chairman of Harvey, told TWICE last week that he would withhold comment pending an 8-K filing with the SEC by last Thursday. At press time the chain did not make a filing. Check www.TWICE.com for further developments.