TIDMMIDW
RNS Number : 4688I
Midwich Group PLC
14 December 2020
14 December 2020
Midwich Group Plc
("Midwich", the "Midwich Group" or "the Group")
Acquisition of controlling stake in the NMK Group
Midwich, a specialist audio visual ("AV") distributor to the
trade market with operations across the UK and Ireland, Continental
Europe, North America and Asia-Pacific, is pleased to announce it
has entered into a binding agreement to acquire a controlling stake
in Nicolas M. Kyvernitis Electronics Ent., NMK Middle East FZE and
Edge Electronics Trading LLC ("Edge") (collectively "the NMK Group"
or "NMK"). Based in the UAE and Qatar, the NMK Group is a
value-added distributor of AV products and represents Midwich's
entry into the Middle Eastern market.
As part of the agreement, Midwich will acquire 80% of the voting
rights of each of the NMK Group companies. The purchase price
comprises an initial cash consideration of AED 49.8 million
(approximately GBP10.0 million) followed by an additional AED 21.0
million in cash (approximately GBP4.2 million) six months later.
Completion, which is subject to local regulatory approval(s) as
required by foreign investment laws in the region, is expected in
early 2021.
Based in Sharjah, UAE, NMK was founded in 1989 by Nicolaos
Kyvernitis. Through its operations in Sharjah and Dubai, the
business supplies specialist AV products to customers in the UAE
and wider Gulf region, with Edge, based in Doha, supporting
customers in Qatar. The NMK Group will continue to be led by the
existing management team of Alex Kemanes (Managing Director) and
Constantinos "Dino" Drimakis (Director - Business Development), who
will retain their aggregate 20% shareholding in the NMK Group.
Nicolaos Kyvernitis will retire from the business following a
period of transition post completion.
NMK is a specialist audio and visual distributor with a strong
heritage in the professional audio market where the business
operates with high-end specialist brands, such as Shure and Bose.
More recently, NMK has expanded its technology offering, including
the addition of key video brand Epson to its portfolio.
The Middle Eastern market is one of the fastest growing AV
markets in the world according to trade body AVIXA. The deal
further expands Midwich's geographical footprint, enabling the
Group to extend the support it can provide to customers and vendors
internationally. The acquisition further delivers on the Group's
strategy to grow earnings both organically and through the
selective acquisition of strong, complementary businesses. The deal
follows the acquisition of US distributor Starin Marketing Inc. in
February 2020.
In the pre Covid year ended 31 December 2019, the NMK Group
generated revenues of approximately AED104 million (GBP21.6
million) and net profit of AED17.9 million (GBP3.7 million). Net
assets as at 31 December 2019 were AED73.5 million (GBP14.8
million), including net cash of around AED 38 million (GBP7.6
million). Although the Covid crisis has had some impact on the NMK
Group, trading performance has recovered well and long-term
prospects appear unaffected.
Stephen Fenby, the Midwich Group Managing Director,
commented:
"This is an exciting day for the Midwich Group as it not only
marks the Group's entry into one of the fastest growing AV markets
in the world, but also means we now have a presence in all major
global territories. This gives us a truly global footprint, and
ensures we are able to support our customers across all key
geographies.
"NMK has built a strong reputation for service and its value-add
model is an excellent fit with Midwich's global offering. We are
looking forward to working with Alex, Dino and the rest of the NMK
Group team to support their growth ambitions and to further enhance
our Group proposition.
"I would also like to take this opportunity to thank Nicolaos
Kyvernitis for his support through the transaction, and to wish him
well in the future."
Alex Kemanes, Managing Director of NMK Group commented:
"During our initial conversations it became apparent that
Midwich would be the ideal partner to support NMK with its growth
ambitions. Dino and I are delighted to be joining the Midwich Group
and very much look forward to working with our new colleagues."
Further Details of the Transaction
The acquisition is expected to be earnings enhancing in the
first full year following completion.
The transaction will be undertaken on a cash free/ debt free
basis.
The consideration for the acquisition will come from the
remaining proceeds of the Group's fundraise undertaken in February
2020, having funded the acquisition of Starin Marketing, Inc.
Options are in place whereby Midwich can purchase (or management
can sell) the remaining 20% of the NMK Group in three years' time
or later, with the capped consideration payable based on pre-agreed
formula linked to the financial performance of the NMK Group, up to
a maximum of AED 46 million (GBP9.3 million). The maximum aggregate
consideration for the purchase of 100% of the NMK Group is AED
116.8 million (GBP23.5 million).
Note : Exchange rate used GBP1 = AED 4.96
For further information:
Midwich Group plc Tel: +44 (0) 13 7964
Stephen Fenby, Managing Director 9200
Stephen Lamb, Finance Director
Investec Bank plc (NOMAD and Joint Broker to Tel: +44 (0) 20 7597
Midwich) 5970
James Rudd
Carlton Nelson
Ben Griffiths
Berenberg (Joint Broker to Midwich) Tel: +44 (0) 20 3207
Ben Wright 7800
Mark Whitmore
Alix Mecklenberg-Solodkoff
FTI Consulting
Alex Beagley
Tom Hufton
Rafaella de Freitas
About Midwich Group
Midwich is a specialist AV distributor to the trade market, with
operations in the UK and Ireland, Continental Europe, Asia-Pacific
and North America. The Group's long-standing relationships with
over 500 vendors, including blue-chip organisations, support a
comprehensive product portfolio across major audio visual
categories such as large format displays, projectors, digital
signage and professional audio. The Group operates as the sole or
largest in-country distributor for a number of its vendors in their
respective product sets.
The Directors attribute this position to the Group's technical
expertise, extensive product knowledge and strong customer service
offering built up over a number of years. The Group has a large and
diverse base of over 20,000 customers, most of which are
professional AV integrators and IT resellers serving sectors such
as corporate, education, retail, residential and hospitality.
Although the Group does not sell directly to end users, it believes
that the majority of its products are used by commercial and
educational establishments rather than consumers.
Initially a UK only distributor, the Group now has around 1,000
employees across the UK and Ireland, Continental Europe,
Asia-Pacific and North America. A core component of the Group's
growth strategy is further expansion of its international
operations and footprint into strategically targeted
jurisdictions.
For further information, please visit
www.midwichgroupplc.com
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