TIDMVTC
RNS Number : 6330R
Vitec Group PLC (The)
25 September 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO THE SAME WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
The Vitec Group plc
22 September 2017
ACQUISITIONS
Acquisition of JOBY and Lowepro from DayMen Group
Acquisition of RTMotion
The Vitec Group plc ("Vitec" or the "Group"), the international
provider of products and solutions to the Broadcast and
Photographic markets, announces that on 22 September 2017 it
acquired certain assets and liabilities, primarily comprising the
JOBY and Lowepro brands, from the DayMen Group S.a.r.l. ("DayMen"),
for a cash consideration of $10.3 million (GBP7.6 million), on a
debt/cash free basis, with an expected total investment of $32.0
million (GBP23.7 million), including deal costs.
Vitec also announces that on 20 September 2017 it acquired RT
Motion Systems Ltd ("RTMotion") for up to GBP3.4 million in cash,
including deal costs. RTMotion provides wireless motor lens control
systems for broadcast, cine and video cameras.
Stephen Bird, Group Chief Executive of Vitec, commented:
"Vitec is the natural home for JOBY and Lowepro and we know the
business well. This is an opportune time to buy these high profile,
high quality brands: JOBY has been growing rapidly, reflecting its
success in developing innovative new products for the camera
accessories market, while Lowepro represents an opportunity to
improve margins through cost reductions and integration with
Manfrotto, along with the potential for additional benefits as its
markets improve.
"RTMotion is a high technology business which complements our
existing activities and gives the Group additional high quality
camera accessories for the expanding independent content creator
market.
"Both of these acquisitions are an excellent strategic and
technological fit, have great prospects, and the two acquisitions
together are expected to materially enhance earnings per share in
2018 and beyond.
"This is an exciting time for Vitec as we continue to expand our
range of innovative, new products for the fast growing image
capture and sharing market, and I am delighted to welcome both
teams to Vitec."
Acquisition of JOBY and Lowepro
This acquisition is an excellent strategic fit with Vitec's
existing core activities. It gives the Group greater access to the
fast growing iPhoneography and vlogging consumer accessories
market, and expands its presence in the US market by adding high
quality, complementary, leading brands to enhance its Photographic
Division.
JOBY and Lowepro products are designed and developed in Hong
Kong and California respectively. In 2006, JOBY introduced the
patented GorillaPod which has transformed the camera accessories
market and, like Manfrotto, JOBY has a strong presence in Apple
stores. Lowepro has been a market leader in bags designed to
protect electronic and photographic devices since its inception in
1967.
In addition to leading brands, the acquisition brings product
marketing resources located in California and expert engineering
teams based in the Far East. Dedicated supply chain teams are
located in Hong Kong and China where all products are manufactured
by third parties and sold globally via independent
distributors.
Vitec plans to integrate JOBY and Lowepro into its Photographic
Division's existing organisational structure, under the leadership
of Marco Pezzana, Photographic Divisional Chief Executive.
Strategic rationale for the acquisition:
This acquisition gives the Group:
-- A leading global position in the new and fast growing
iPhoneography and vlogging accessories markets, as well as the
photographic bags market;
-- Increased visibility in the US market to become a leading
distributor of premium imaging accessories;
-- The potential to continue to improve the core business in the
consolidated Photographic Division by
- Leveraging the combined brand portfolio and distributor network
- Consolidating and augmenting procurement capabilities
- Enriching the technical capability of the expanded team;
-- An expanded product development team and technical
capabilities with access to new intellectual property facilitating
Vitec's growth in the higher technology areas of iPhoneography and
vlogging accessories with JOBY's GorillaPod;
-- The opportunity to get closer to customers by consolidating
the strategic relationships with Apple and online retailers such as
Amazon, the leading consumer electronics retailers, B&H and
other photo speciality retailers; and
-- A platform to expand further in APAC and strengthen the
Group's presence in China and Hong Kong through the JOBY and
Lowepro supply chain teams who are based there.
Financial aspects of the acquisition:
-- DayMen reported unaudited results for the year to 31 March
2017 of $73.2 million (GBP56.3 million) revenue with operating
profit* of $1.4 million (GBP1.1 million). EBITDA was $2.1 million
(GBP1.6 million). Net assets were c. $11.0 million (c. GBP8.8
million) at 31 March 2017 and gross assets were c. $19.7 million
(c. GBP15.8 million) at this date. Net assets acquired are expected
to be c. $1.2 million (c. GBP0.9 million);
-- Vitec has acquired certain assets and liabilities of the
DayMen Group S.a.r.l. including subsidiary companies in Hong Kong
and China for a cash consideration of $10.3 million (GBP7.6
million). This is subject to certain post-completion adjustments
for changes in net assets;
-- The one-off cash costs to implement the integration and
deliver cost savings are expected to be approximately $7.0 million
(GBP5.2 million), including deal costs, and will be incurred by the
end of 2018. The P&L impact of integration costs will be taken
above the line;
-- As we transition from a third party distribution model to
utilising Vitec-owned distribution there will be an expected $14.7
million (GBP10.9 million) investment in working capital;
-- Pre-tax cost savings of at least $5.0 million (GBP3.7
million) per annum are expected to be realised by year ending 2018,
and at least $7.0 million (GBP5.2 million) per annum by year ending
2019, through consolidating and simplifying the business, improving
procurement and supply chain management, and leveraging Vitec's
distribution platform;
-- The acquisition is expected to enhance Vitec's adjusted
earnings per share in FY 2018 and to be materially enhancing to
Vitec's adjusted earnings per share in FY 2019. Excluding
integration costs, we expect it to be neutral to adjusted earnings
per share in 2017;
-- ROCE is expected to be in excess of the Group's average by year ending 2018; and
-- The consideration payable to DayMen will be funded from
Vitec's available committed bank facilities. Proforma 30 June 2017
net debt to EBITDA would have been 0.9x following the disposal of
Bexel and the acquisition of the JOBY and Lowepro brands.
Acquisition of RTMotion
The acquisition of RTMotion is in line with Vitec's strategy of
offering innovative and highly technical solutions to the Group's
established independent content creator ("ICC") customer base, and
will facilitate Vitec's growth in the higher technology area of
camera accessories.
RTMotion is an excellent strategic fit with Vitec's Broadcast
Division's Creative Solutions Business Unit, complementing Teradek,
Wooden Camera, SmallHD, Paralinx and Offhollywood, which also
design and produce high quality products mainly for ICCs.
Based in the UK, RTMotion designs and assembles wireless motor
lens control systems for video cameras, selling them primarily
through direct distribution and a growing reseller network, mainly
targeting the ICC market.
RTMotion will become part of Vitec's Creative Solutions Business
Unit. There are significant growth opportunities to sell RTMotion's
products through Vitec's global sales and distributor network, and
the business will benefit from Vitec's marketing, manufacturing and
supply chain capabilities.
Under the terms of the acquisition, the initial cash
consideration is GBP2.6 million on a debt/cash free basis,
including deal costs and GBP0.5 million held in escrow. Up to a
further GBP0.8 million cash consideration will be payable dependent
on the seller meeting integration and retention targets.
Conference Call
Stephen Bird, Kath Kearney-Croft, Group Finance Director, and
Martin Green, Group Business Development Director will hold an
analyst and investor call at 10:00am on Monday 25 September 2017,
to discuss this announcement. Dial in details for the call can be
obtained by contacting MHP Communications on 020 3128 8771 or
vitec@mhpc.com. A copy of the presentation slides will be available
on www.vitecgroup.com.
-Ends-
Enquiries:
The Vitec Group plc
Stephen Bird, Group Chief Executive
Kath Kearney-Croft, Group Finance Director
Telephone: 020 8332 4600
MHP Communications
Tim Rowntree
Ollie Hoare
Telephone: 020 3128 8771
Notes:
* Before restructuring costs
1. ROCE (Return on Capital Employed) is calculated as adjusted
operating profit for the last twelve months divided by average
total assets less current liabilities excluding the current portion
of interest-bearing borrowings. Adjusted operating profit is before
charges associated with acquisition of businesses, restructuring
costs and gain on disposal of business.
2. Average foreign exchange rates in the period from 1 January to 30 June 2017: GBP1 = $1.27
3. Average foreign exchange rates in 2016: GBP1 = $1.35
4. Balance sheet rate at 31 March 2017: GBP1 = $1.25. Estimated
average foreign exchange rate for the twelve months to 31 March
2017: GBP1 = $1.30
5. Nothing in this announcement should be construed as a profit forecast
6. Estimated foreign exchange rate at completion: GBP1 = $1.35
A snapshot of The Vitec Group plc
Vitec is a leading global provider of premium branded products
and solutions to the fast changing and growing "image capture and
sharing" market.
Vitec's customers include broadcasters, independent content
creators, photographers and enterprises, and our activities
comprise: design, manufacture and distribution of high performance
products and software including camera supports, wireless systems,
robotic camera systems, prompters, LED lights, mobile power,
monitors and bags.
We employ around 1,700 people across the world in ten different
countries and are organised in two Divisions: Broadcast and
Photographic.
The Vitec Group plc is listed on the London Stock Exchange with
2016 revenue of GBP376.2 million.
More information can be found at: www.vitecgroup.com.
About DayMen Group
Since its inception in 1981, DayMen has enjoyed an exceptional
brand reputation in the photographic and consumer electronics
industry as an innovative designer, marketer and distributor of
high quality imaging accessories from the JOBY and Lowepro brands.
Founded in 1967 by adventure photographer and outdoorsman Greg
Lowe, Lowepro celebrates its 50th anniversary this year. While
JOBY, formed in 2006 and acquired by DayMen in 2011, celebrates
over 10 years of manufacturing and selling the breakthrough
portable and flexible-leg tripod family of GorillaPods.
Headquartered in the San Francisco Bay area, DayMen has over 100
employees globally, with sales staff in the US, Canada, France, UK,
Germany, Switzerland, and Hong Kong.
More information can be found at: www.daymen.com
About RTMotion
RTMotion was founded in Scotland, UK in 2009, before relocating
operations to England in 2013 and evolving rapidly towards the
release of the signature RTMotion Lens Control System MK3.1, now
one of the world's most trusted and versatile LCS options.
Pioneering the use of brushless motors and advanced, long-range
wireless technology, RTMotion continues to invest heavily in
R&D, working closely with its worldwide network of partners,
rental houses and customer base of world class cinematographers and
camera departments.
More information can be found at: www.rtmotion.com
LEI number: 2138007H5DQ4X8YOCF14
This information is provided by RNS
The company news service from the London Stock Exchange
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