(Sharecast News) - Music and audio products company Focusrite announced the acquisition of Martin Audio and associated companies, a designer and manufacturer of high-performance loudspeaker systems for the touring and installation markets, it announced on Thursday.
The AIM-traded firm said the total consideration would be £39.2m for the business, which has around £4m of cash.
That would be funded through a combination of existing cash resources, and a new loan facility of £40m with HSBC and NatWest.
The company said the completion of the loan facility, and thus the completion of the acquisition, remained dependent on shareholder approval in a general meeting on 30 December.
Under the AIM rules, the acquisition would be a 'substantial transaction, with the board adding that it expected it to be enhancing to earnings per share in the current financial year, excluding non-underlying transaction costs, and thereafter.
Focusrite said Martin Audio, founded in 1971 and also headquartered in High Wycombe, designs, manufactures and distributes premium professional sound systems globally.
It employs 74 people worldwide, with the vast majority based at its head office and co-located manufacturing facilities.
In the year ended 31 December 2018, Martin Audio's turnover was £21.7m, with EBITDA of £2.6m and EBIT of £2.4m.
Net assets for Martin Audio as at the 2018 year-end totalled £4.1m.
In the 12 months to October 2019, on an unaudited basis, Martin Audio's turnover was £24.4m, with an EBITDA of £3.4m and EBIT of £2.9m.
The Focusrite board said the deal marked an exit for LDC, the private equity arm of Lloyds Banking Group, which backed the existing management team led by Dominic Harter to buyout the firm from global audio specialist Loud Audio in July 2018.
It was the second substantial acquisition made by Focusrite in the 2019 calendar year, following the purchase of ADAM Audio and its associated companies for a total consideration of £16.2m in July.
Following the acquisition of Martin Audio, the Focusrite Group would have net debt of around £25m.
After the transaction is completed, it was expected that Martin Audio would continue to operate from its existing headquarters and factory in High Wycombe, under the leadership of its current management team and managing director, Dominic Harter.
By extending the group's business into new products and markets, which complement its existing offerings, the board said the acquisition was strategically aligned with its previously-communicated aims to grow the core customer base, expand into new markets and increase lifetime value for customers.
"The acquisition of Martin Audio is a clear demonstration of our strategic aim to expand into complementary new markets," said chief executive officer Tim Carroll.
"Martin Audio is an established brand with solid financials that can instantly add value to the enlarged Group.
"Just as importantly, the business is culturally aligned with our existing operations."
Carroll said they would have an important role to play as the company continued to focus on its goal of enriching lives through music, by removing barriers to creativity - "from that first spark of musical inspiration, to delivering an emotionally charged performance on stage".
"The Martin Audio team share our hunger to innovate and our passion as music and sound enthusiasts.
"Their close geographical proximity to Focusrite will help significantly in the development of future cross selling and marketing strategies."
At 1030 GMT, shares in Focusrite were up 1.84% at 608.99p.
Focusrite (TUNE)2 May 2024 13:49