Scottsdale, Ariz. – Harvey Electronics and MyerEmco executives gave out additional details on their proposed merger late Tuesday, while industry reaction at the Pro Group meeting held here was supportive of the deal.
Though the executives put off discussing the financial aspects of the deal, Gary Yacoubian, president/COO of MyerEmco and Martin McClanan, interim CEO of Harvey Electronics, did explain a few more of the merger’s specifics.
The combined company will have 19 stores and Yacoubian will retain his president/COO title at the new Harvey Electronics.
Yacoubian will work out of his Maryland office, but spend about half his time in New York. MyerEmco executives will stay in Maryland with their Harvey counterparts remaining in the New York area.
There has been no decision on the future role of Jon Myer, MyerEmco’s, CEO and principal owner, or MyerEmco and Harvey executives at this time.
Yacoubian said the new umbrella company will be called Harvey Electronics, but each chain will retain its individual brand name in existing markets. While a timeframe was not placed on completing the deal, each side wishes it to close “as soon as possible.”
McClanan said the deal was “in development before Christmas” with Yacoubian stating the company will release additional details about the transaction after closing.
MyerEmco began exploring different ideas to provide more growth for the ownership team that includes founder Jon Myer, and provide more growth for the chain, so the retailer began to “look at the possibilities,” Yacoubian said.
There is a reasonable amount of overlap in brands between the two chains and that there is no conflict in the brands they carry. “We will consider ourselves a regional retailer” when the deal is completed, Yacoubian said.
“Harvey is better at retail than MyerEmco, while they are better at custom installation. We will learn each other’s best practices. MyerEmco has slightly higher sales than Harvey," said McClanan. Yacoubian said the privately held MyerEmco is profitable and he quoted McClanan as the deal being a “merger of equals.”
Harvey is a publicly traded company and was No. 90 in TWICE’s 2006 Top 100 CE Retail Registry with about $41 million, while the privately-held MyerEmco ranked 93rd with around $38 million in annual sales.
There are “two separate advertising markets involved” between the two chains, metro D.C. and metro New York City, Yacoubian said.
“For manufacturers who want to present their lines to the Washington, Baltimore and New York markets with a unified message and approach, they can come to us,” McClanan told TWICE.
When asked about expansion, McClanan noted, “We need to execute the transaction and integrate our operations. We need to build strong fundamentals. Then growth is possible.”
He added, “There are plenty of commodity sellers out there, those that sell on price,” but McClanan noted, “With the complexity of the technology out there, it isn’t just a simple home theater anymore. You have to sell home networking, lighting, design ... it really is an engineering question nowadays.”
Yacoubian said fellow PRO Group members and suppliers MyerEmco and Harvey, “could not be more alike,” in the way they go to the market and the brands they carry. Harvey has been a member of the PRO Group for less than a year.
Yacoubian told TWICE that the two companies wanted to make the announcement at the PRO meeting. “We timed this. We didn't want to have 19 separate one-on-one meetings scheduled with our suppliers” and then later announce a merger.
Vendors cited the specialty retailer chain’s excellent track record in their respective markets and strong management skills as reasons to believe the combined company will be a success.
George Manlove, chairman of PRO Group and CEO of Vann’s, applauded the deal.
“There are synergies in evidence between both retailers and both markets. And there is a lot of financial support for the deal. We are glad that both [retailers] will continue to be part of the PRO Group,” he said.
“The group and the industry have a tremendous amount of respect for Gary [Yacoubian’s] skills. What Trinity Partners [Harvey’s main investor] is saying is that they are in [specialty retailing] for the long term, and that’s a positive thing. [Harvey and MyerEmco] will remain PRO members. It says a lot that investors still think highly of specialty retailers that they would make this type of investment and believe it its ability to grow,” said Dave Workman, executive director of the PRO Group.
Jim Sanduski, VP/GM of digital TV solutions for HP’s Personal Systems Group, said, “They are two great brands in two different markets. Their customer base is similar and they go to market in a similar way. It is a good opportunity for both [chains] and Gary [Yacoubian] has a great deal of industry knowledge.”
Jay Vanderbree, president of Sony Electronics Consumer Sales, commented, “It all depends on what [MyerEmco and Harvey] want to be and how they go to market. It will be interesting to see how they do it, but it will take a lot of effort.”
Bob Scaglione, senior VP and GM, Sharp Electronics, said, "The joining of these two prominent retail outlets is a perfect opportunity for Harvey to enhance its brand awareness even further down the East Coast. Sharp has always had a great relationship with both Harvey and MeyerEmco, and we look forward to a continued strong presence for the Sharp brand and its products as this high-end chain continues to grow and thrive."