Audiovox Electronics will focus initially on stepping up shipments of Jensen, Advent and Acoustic Research products now that a federal bankruptcy court approved its bid to buy Recoton's electronics businesses in the U.S. and Europe.
Bankrupt Recoton suffered "significant problems in deliveries since October," Audiovox Electronics president Pat Lavelle told TWICE. "Our first priority is to improve shipments."
Longer term, the acquisition of multiple brands will enable Audiovox to increase its penetration of the home and car electronics markets without running into channel conflicts among retailers, he said. Additional brands will provide "more freedom to satisfy our retail customers," he added.
Audiovox Electronics, a subsidiary of Audiovox Corp., will pay $40 million plus the assumption of $5 million in debt. The purchase is expected to close by June 30. Once deliveries resume, the new brands will generate an additional $70 million to $100 million in annual revenue in the first year of ownership, said Audiovox Corp. chairman John Shalam. Audiovox's other subsidiary markets cellular phones.
The acquisition will be the second by Audiovox Electronics in a little more than a year. In March 2002, the electronics supplier acquired car security supplier Code-Alarm to complement Audiovox's existing car security lineup.
The latest acquisition made sense, Shalam explained, because "of the synergies that exist in our product lines, customer base and business practices." Audiovox and the acquired Recoton brands, Lavelle noted, share many of the same distribution channels in home and car products, including big box retailers, automotive chains, distributors, and 12-volt specialists. To those, Audiovox adds car-dealer expediters, select boat manufacturers, and OEM sales of car audio, video and security to automakers in the United States and foreign markets.
Shalam also pointed out that the purchase "will create minimal financial pressure on our operation since our cash position, combined with our credit facilities, will more than cover the transaction." The company, Lavelle noted, expects "to blend the Recoton brands into our electronics subsidiary with minimal overhead expense."
Naming Names: With the latest acquisition, Audiovox obtains the Jensen, Acoustic Research, and Advent brands for electronics products and the inactive Phase Linear brand for electronics. The accessory businesses under these brands went to Thomson in a separate acquisition.
Audiovox also inherits the Road Gear car audio name, which was sold primarily to Wal-Mart.
In Western Europe, Audiovox obtains the HECO home speaker brand and the Mac Audio and Magnat brands of home and car speakers and amplifiers. They'll complement Audiovox car electronics marketed there.
In the United States, the acquired brands will complement Audiovox's home, car, and portable A/V brands, which include the Audiovox brand in home and portable products. In car A/V, Audiovox's current brands include Audiovox, Prestige, Rampage and SPS. In car security, the company's brands are Prestige, Audiovox, Pursuit, Code-Alarm and Chapman.
In the acquisition, Audiovox also inherits two U.S. brand-licensing deals. Under one long-term contract, Spectra Merchandising markets Jensen-brand portable audio, home audio electronics, and portable video products, including clock radios, mini and micro systems, and under-counter CD clock radios. Under the other contract, Chinese television manufacturer Prima Technology licenses the Advent and Jensen names for mid- to upper-end televisions.
Audiovox will "maintain the current licensing arrangements," Lavelle said.
Brand Plans: In outlining Audiovox's brand plans in general, Lavelle said Audiovox will continue to market home speakers and car electronics under the Jensen brand. In car, Jensen's brand will help the company increase its penetration in the speaker and amplifier markets, where Jensen "had good penetration" compared to Audiovox, he said. Audiovox has a major share of the car video market and will consider Jensen-branded car video, he added.
In the home, Recoton marketed Acoustic Research and Advent home speakers, but Audiovox intends to extend the brands "by offering a complete line of Acoustic Research, Advent and Audiovox speaker and entertainment systems," Lavelle said. He pointed to a potential for step-up home-theater-in-a-box systems under the Acoustic Research name to complement current Audiovox models.
The company has no specific plans yet for the Phase Linear brand.
Other Audiovox-branded products include portable stereo, portable DVD players, under-counter TVs, LCD TVs, FRS radios, cordless phones, music systems and home-theater-in-a-box systems.