Warpaint London buys out its own US distributor

(Sharecast News) - Colour cosmetics specialist supplier Warpaint London, which owns the W7 and Technic brands, announced the acquisition of its US distributor Marvin Leeds Marketing Services on Friday.The AIM-traded firm said New York-based Leeds Marketing currently derived about two thirds of its revenue through the distribution of Warpaint's W7 products, with the remainder being through the sale of other branded cosmetics.Leeds Marketing was its exclusive distributor in the US until January, and sold its products to major 'off-price' retail groups in North America, including the TJX Companies and Bealls Outlet Stores.It said that recently, Leeds Marketing had opened new accounts for W7 and other Warpaint brands with a number of retailers in the US, including Century 21, Forever 21, and Macy's Backstage.Warpaint's board said the US was the world's largest colour cosmetics market by value, adding that it believed the acquisition would allow it to have greater control over its North American sales activities, enabling it to achieve its declared strategy of international expansion, particularly in the United States.In addition, the acquisition was expected to open up further opportunities to expand sales in Central and South America, where customers apparently preferred to be served by a US-based entity.In the year ended 31 December, Leeds Marketing had revenue of $5.9m and profit before tax, adjusted for non-recurring costs after completion of the acquisition, of around $0.4m.Net assets, adjusted for a capital reorganisation on completion of the acquisition as at 31 December, were $1.1m.Under the terms of the acquisition, the consideration would comprise $2.16m in cash, subject to an adjustment depending on the net assets acquired which were expected to be $0.8m.The company had already paid $2m in cash, with two further payments of $80k due on 30 September and 31 December, subject to the net asset adjustment."We see the acquisition of Leeds Marketing as a further important milestone in our growth story," said joint chief executives of Warpaint, Sam Bazini and Eoin Macleod, in a statement."Since admission to AIM, we have focused on international expansion and the US is central to that strategy."Bazini and Macleod said the acquisition would allow Warpaint and its brands direct access to some of its key existing customers, as well as opening up a number of new opportunities in the US and the Americas more widely."We look forward to integrating the Leeds Marketing staff into the existing Warpaint team and continuing to expand the routes to market for our products."