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SYNNEX To Buy New Age For $54.3M

Fremont, Calif. — New Age Electronics (NAE), one of the industry’s largest consumer electronics and IT distributors, has agreed to be acquired by SYNNEX Corp. for approximately $54.3 million in cash.

SYNNEX, based here, provides services in IT distribution, supply chain management, contract assembly and business process outsourcing for resellers and original equipment manufacturers (OEMs) worldwide.
The deal represents the second major consolidation within the distributor sector in less than a year, following last June’s $96 million purchase of DBL by Ingram Micro.

SYNNEX said the acquisition of the privately held business will substantially expand its existing CE product offering by adding complementary consumer and retail products. New Age’s manufacturer roster includes Hewlett-Packard, Panasonic, Sharp, Kodak and Samsung.

The deal is expected to close in April.

“New Age Electronics is well known and highly regarded for its execution in the retail market for consumer electronics distribution,” said SYNNEX president/CEO Robert T. Huang. “This acquisition will greatly expand our consumer electronics offering. Once we complete the integration, we anticipate NAE’s core business to be accretive to our earnings. This acquisition also meets our stringent ROIC [return on investment capital] growth targets. We look forward to creating increased value and accelerating the growth of our combined business through synergies, scale and shared resources.”

Under terms of the deal, New Age principal and co-founder Lee Perlman will retire at the close of the transaction and his partner Adam Carroll will continue as president. Carroll will report to Peter Larocque, SYNNEX’s president of U.S. distribution. Reporting to Carroll will be Fred Towns, sales senior VP, and Gary Palenbaum, product marketing senior VP. The new reporting structure aligns the consumer electronics offerings of both organizations under a single leader, SYNNEX said, and leverages the combined expertise of both teams for future growth. New Age has approximately 175 employees.

“SYNNEX has a very solid reputation across the distribution industry, and its core competencies align with NAE’s business strategy,” said Perlman and Carroll said in a statement. “Together with SYNNEX’ diversified product offering and NAE’s customer base and expertise in sales and marketing for consumer electronics, we are well-positioned to achieve our next phase of significant growth. We look forward to becoming a part of the SYNNEX family.”

Larocque commented, “Consumer electronics is a key area of focus for SYNNEX. Adding the NAE business vaults SYNNEX into a leading position in this market. The combination of these two operations is a win for all of our stakeholders. I look forward to leveraging our combined strengths and resources to better serve our partners and to create added value for all of our stakeholders.”

Added Huang, “I would like to congratulate Lee on his success in building NAE to its current successful state, and thank him for developing talented coworkers that will help the combined entities be a leader in consumer electronics distribution.”

The purchase price of $54.25 million in cash includes approximately $22.75 million in deferred and earn-out payments, which are subject to certain post-closing conditions. It is expected that the bulk of the deferred and earn-out payments will be paid within the first 15 months after the close of the acquisition. In connection with the net assets acquired, SYNNEX will assume and refinance approximately $75 million in working capital debt. The purchase price and assumed debt will be financed by existing SYNNEX debt facilities which are currently being amended to support this acquisition. The transaction, which is subject to normal regulatory and other approvals, is expected to close in April 2008.

In the 12 months ending Dec. 31, 2007, NAE’s revenue was in excess of $900 million. Its partnership with HP comprised approximately 89 percent of fiscal 2007 revenue.

Eureka Capital Markets represented New Age Electronics in this transaction.