A-Mark to Increase Investment in Silver Gold Bull, Expanding International Direct-to-Consumer Footprint
29 April 2022 - 10:00PM
A-Mark Precious Metals, Inc. (NASDAQ:
AMRK) (A-Mark), a leading fully integrated precious metals
platform, today announced it has entered into a definitive
agreement to acquire an additional 40% of the outstanding equity
interest in Calgary-based Silver Gold Bull Inc. (SGB) for
approximately $44.0 million. The proposed investment will bring
A-Mark’s ownership in SGB to 47.4% and will expand A-Mark’s
direct-to-consumer (DTC) footprint in the international market.
A-Mark acquired its initial interest in SGB in 2014, increasing its
investment to 7.4% in 2018. Founded in 2009, SGB is a leading
e-commerce precious metals retailer in Canada focused on providing
online innovation, high-quality products, competitive pricing, and
excellent customer service.
Acquisition Summary
- A-Mark will pay
approximately $44.0 million for 40% of the outstanding equity
interest in SGB, implying an enterprise value of $110.0 million.
Total consideration is comprised of $34.0 million in cash and $10.0
million of A-Mark common stock.
- As a condition
to closing, SGB will be required to have at least $15.0 million in
net tangible assets.
- A-Mark and SGB
will enter into a four-year extension to the current supplier
agreement extending its expiration to December 2026.
- A-Mark will have
the right to purchase an additional 27.7% of the outstanding equity
of SGB to bring its ownership interest to 75%. The option is
exercisable between months 18 and 27 following closing.
The acquisition is expected to close in the second quarter of
calendar 2022, subject to customary closing conditions and
regulatory approval.
SGB financial and operational highlights
for the 12 months ended March 31, 2022, include:
- Net sales of
$633.0 million, gross profit of $41.2 million (6.5% of net sales),
and pre-tax income of $26.3 million (4.2% of net sales);
- Sold more than
9.1 million ounces of silver (up approximately 47.5%
year-over-year) and more than 160,000 ounces of gold (up
approximately 29% year-over-year);
- Added
approximately 77,600 new customers in the period, for a total of
270,100 customers at March 31,2022 (up approximately 48%
period-over-comparable period);
- Processed
approximately 244,200 orders in the period (up approximately 15%
period-over- comparable period)
Management Commentary
“Since our initial investment in SGB and
throughout my time on their Board or as a Board observer, since
2014, the A-Mark team and I have been continually impressed with
SGB’s track record of growth and profitability within their DTC
markets,” said A-Mark CEO Greg Roberts. “This investment will
provide A-Mark with additional international presence through SGB’s
success in Canada and emerging growth opportunities in other
international markets. Additionally, the extended supplier
agreement will allow both companies to continue leveraging A-Mark’s
minting and wholesale sources of supply. We continue to execute our
strategy of growing our retail footprint with this current
investment and the option we secured to further expand our
ownership in SGB in the future.”
Bob Belandis, President, and Co-founder of
Silver Gold Bull commented: “This is an exciting day for Silver
Gold Bull. We have enjoyed substantial growth since we started our
company 13 years ago through the hard work of our committed team.
Strengthening our partnership with A-Mark will allow SGB to
continue being well-positioned to capture opportunities within the
online bullion market for Canada and other international
geographies.”
Transaction AdvisorsD.A.
Davidson & Co. is acting as financial advisor to A-Mark, and
Kramer Levin Naftalis & Frankel LLP and Frye & Hsieh LLP
are acting as legal advisors to A-Mark. MLT Aikins LLP is acting as
legal advisor to SGB.
About A-Mark Precious
MetalsFounded in 1965, A-Mark Precious Metals, Inc.
(NASDAQ: AMRK) is a leading fully integrated precious metals
platform that offers an array of gold, silver, platinum, palladium,
and copper bullion, numismatic coins and related products to
wholesale and retail customers via a portfolio of channels. The
company conducts its operations through three complementary
segments: Wholesale Sales & Ancillary Services,
Direct-to-Consumer, and Secured Lending. The company’s global
customer base spans sovereign and private mints, manufacturers and
fabricators, refiners, dealers, financial institutions, industrial
users, investors, collectors, and e-commerce and other retail
customers.
Important Cautions Regarding
Forward-Looking Statements
Statements in this press release that relate to
future plans, objectives, expectations, performance, events and the
like are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 and the Securities
Exchange Act of 1934. Future events, risks and uncertainties,
individually or in the aggregate, could cause actual results to
differ materially from those expressed or implied in these
statements. Factors that could cause actual results to differ
include the following: the inability to satisfy the conditions to
the closing of the SGB investment; the failure of SGB to maintain
its unique customer base or changes in the buying preferences of
this customer base; the failure otherwise to achieve anticipated
benefits of the investment; changes in consumer demand and
preferences for precious metal products generally; the continuing
effects of the COVID-19 pandemic and the eventual return to
normalized business and economic conditions; and the strategic,
business, economic, financial, political and governmental risks
described in in the company’s public filings with the Securities
and Exchange Commission.
The words "should," "believe," "estimate,"
"expect," "intend," "anticipate," "foresee," "plan" and similar
expressions and variations thereof identify certain of such
forward-looking statements, which speak only as of the dates on
which they were made. Additionally, any statements related to
future performance are forward-looking statements. The company
undertakes no obligation to publicly update or revise any
forward-looking statements. Readers are cautioned not to place
undue reliance on these forward-looking statements.
Company Contact:Steve Reiner, Executive Vice
President, Capital Markets & Investor RelationsA-Mark Precious
Metals, Inc.1-310-587-1410sreiner@amark.com
Investor Relations Contact:Matt Glover or Jeff
Grampp, CFAGateway Investor
Relations1-949-574-3860AMRK@gatewayir.com
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