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CLIFTON, N.J.Dutch consumer electronics giant Royal Philips Electronics has agreed to purchase Gemini Industries in a blockbuster deal that is intended to move one of the largest U.S. broad line accessories companies solidly into the global marketplace.
The two companies signed an agreement last week whereby Philips, the long-time licensor of Philips-brand accessories to Gemini, will acquire the New Jersey-based supplier. Financial details of the acquisition were not disclosed, and subject to regulatory approval, the deal is expected to be finalized in August.
Gemini — which supplies accessories for the audio, video, computing, gaming, digital imaging and telephony markets in the United States under the Philips, Zenith, Magnavox, Southwestern Bell and For Dummies brands — offers about 2,500 products. The privately held company, which recorded 2003 gross sales of about $200 million, employs about 500 people.
Through the acquisition of Gemini, Philips, which has its U.S. headquarters in Atlanta, said it will significantly grow the peripherals and accessories business activities on a global scale.
At the same time, this newest partnership parallels a year-ago deal, when France's CE maker Thomson — already a major competitor with Philips — purchased Recoton, another U.S. broad line accessories company.
The current acquisition is designed to provide Philips and Gemini with an opportunity to broaden Gemini's scope into Europe, better serve the global retailers' needs, and leverage internal synergies between the two companies, said Philips, which has been a supplier to Gemini for the past eight years and has licensed its Philips-brand products as part of Gemini's product portfolio.
"Gemini needs to become global in many respects faster than we anticipated," Michael O'Neal, Gemini's president/ CEO, told TWICE. "Gemini already is doing business in the U.K., Mexico and South America, and obviously is being asked to take its products to other countries. The marriage of Philips and Gemini facilitates that better than any other possible strategy that Gemini could pursue at this point.
"The company is interested in becoming a large, powerful player in the accessories world, and that can take many different forms," continued O'Neal. "Our business relationship with Philips is now eight years old. It is an extremely positive relationship, and this just cements our ability to take collectively the accessories business to the next level. It is the most positive of things we could be doing today with our business."
At this time, Gemini's name will remain the same, and the company will look for a way to reflect in the name the fact that this is a Philips company, O'Neal told TWICE. He sees minimal consequences for the Gemini staff and expects no impact on employee population. "Right now, I don't anticipate that there will be any changes."
As for changes that retailers will see, Gemini has no plans to cease using the existing brands that the company carries, with the most significant change for retailers being Gemini's stronger ability to bring new products and different products to them under the Philips brand name. This will be accomplished by creating new products or by adding what Philips is selling in Europe, said Philips. All existing contracts are going to be honored and Gemini will continue to carry all existing brands, said Philips.
Currently, a team is being put together to integrate Gemini activities into the Philips structure and processes, both in terms of global business creation and regional marketing and sales. It is expected the team will finalize distribution plans in the next three months
The announced agreement gives Philips the opportunity to further its brand awareness in North America and to grow its sales, said Philips.
For Gemini, the Philips' marriage brings fresh investments to its business, and this could very well involve distribution outside of the United States, but in terms of specifics, Philips would not comment.
O'Neal, who at this point will continue to head up Gemini, portrays the acquisition deal as a positive for his company. He told TWICE, "Our ability to be more aggressive with our global customers, and to perhaps be able to bring some new fresh product ideas to our retailers" is how he foresees the immediate future. "And that ought to be all very, very positive."
Gemini — which traces its roots back to 1964, when Sandy Garfinkle founded the company — was shepherded by his entrepreneurship from a small metal fabricating firm into a multimillion-dollar operation.
Gemini was acquired in 2000 by York Management Services, a private investment and management advisory services company based in Somerset, N.J. In July of 2000, O'Neal, who had been chief operating officer, was named president/CEO.
In July of 2001, Gemini acquired Zenith's accessories business and entered into a long-term brand licensing relationship, as well as acquiring all current assets of the Lincolnshire, Ill.-based Zenith Accessories, including inventory and accounts receivables.
In what turned out to be both the zenith and nadir of an O'Neal-fostered strategy coveting both "internal growth and selective acquisition," Gemini's April 2003 announced purchase for $50 million of all the accessories assets of bankrupt Recoton was abruptly terminated that June when Paris-based CE-giant Thomson submitted a winning at-auction bid of $60 million.
At the time, a distinctly disappointed O'Neal, who was known in the CE business as a turn-around specialist and had spent many months and much money to consummate a Gemini/Recoton deal, reiterated Gemini's ongoing plan to expand product lines, add new brands, enlarge its customer base and extend geographic reach, despite the failure to land Recoton.
And even with the possibility of further acquisitions always at hand — which O'Neal continued to emphasize — only one year later, Gemini itself is about to be acquired by Philips.