REG - Midwich Group PLC - Acquisition of prodyTel Distribution Gmbh

MidwichAnnouncement

13/11/2023 07:00

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RNS Number : 2050T  Midwich Group PLC  13 November 2023

13 November 2023

Midwich Group plc

("Midwich", the "Midwich Group" or "the Group")

 

Acquisition of prodyTel Distribution Gmbh

 

Midwich Group (AIM: MIDW), a global specialist audio visual distributor is
pleased to announce that it has entered a binding agreement to acquire
prodyTel Distribution Gmbh ("prodyTel" or "the Company"), a distributor of
professional audio and technical solutions products based near Nuremberg,
Germany.

 

Through its German subsidiary Kern & Stelly Medientechnik GmbH ("Kern
& Stelly"), Midwich will acquire 51% of the Company's share capital for
initial cash consideration of €8.5 million (approximately £7.4 million).
Put/ call options are in place to facilitate the purchase of the remaining 49%
of the share capital in June 2024 for a fixed cash consideration of €8.1
million (approximately £7.1 million).  An additional performance linked
amount of up to €5.5 million (approximately £4.8 million) will be payable
in cash in 2026.

 

Based in Stein, on the outskirts of Nuremberg, prodyTel was founded in 2003,
originally as a manufacturer of audio codecs before switching its focus to
distribution in 2014. From there, it has developed a strong vendor portfolio,
including premium brands Biamp, Aver and Jabra, with a particular focus on the
corporate and education market.  The Company operates across Germany and
employs thirty staff.

 

prodyTel supplements its core distribution services with a suite of value-add
services for its trade customers throughout Germany. These services include
the prodyTel Academy, offering technology seminars, training courses and
product demonstrations to customers from a dedicated 230 sq m space within the
Stein facility.

 

In its latest financial statements, for the year ended 31 December 2022, the
Company generated revenues of €22.0 million (approx. £19.2 million) and
profit before tax of €4.0 million (approx. £3.5 million). Gross assets at
31 December 2022 were €6.3 million (approx. £5.6 million).

 

prodyTel's net cash at signing was around €0.7 million (£0.6 million).
Completion of the transaction is subject to merger control clearance from the
German Federal Cartel Office.

 

Stephen Fenby, Midwich Group Managing Director, commented:

 

"We are delighted to have reached an agreement to acquire prodyTel, which will
strengthen our technology offering in the DACH region. prodyTel has a strong
reputation in the market which has enabled it to attract top tier brands.
Customers greatly value the expertise the Company is able to offer, and will
now be able to benefit from the combined portfolio of prodyTel and Kern &
Stelly. We look forward to working with Christian and his team to build on the
success the business has experienced in recent years."

 

 

 

 

Christian Carrero, Managing Director of ProdyTel commented:

 

"Not only have I developed a lot of personal relationships over the last 20
years with many people within the Midwich family, but prodyTel has often found
itself working alongside Kern & Stelly on common projects. From these
interactions, I had already developed a positive feeling about the corporate
culture in Kern & Stelly.

 

I had quite a few offers to sell my company over the years, but based upon
these past interactions, when the opportunity presented itself to join the
Midwich family, it seemed only logical. I believe this deal can bring prodyTel
and its people to the next level in distribution and equally will allow us to
share our expertise in audio and AV project management to support Kern &
Stelly to further grow its business in Germany.

 

Personally, I am really excited to contribute to the Group with my 25 years of
knowledge in the global AV market and am already looking forward to many new
and exciting projects and ideas within Kern & Stelly and Midwich."

 

Further Details of the Transaction

 

The deal will be funded from Midwich's existing facilities and is expected to
be earnings enhancing in the first full year following completion.

 

The maximum aggregate consideration (including performance-linked
consideration and net of cash at signing) for the purchase of 100% of the
Company is €21.4 million (approx. £18.7 million) payable in cash.

 

 

 Midwich Group plc                                      +44 (0) 1379 649200

Stephen Fenby, Managing Director

Stephen Lamb, Finance Director
 Investec Bank plc (NOMAD and Joint Broker to Midwich)  +44 (0) 20 7597 5970

 Carlton Nelson / Ben Griffiths / Cameron MacRitchie
 Berenberg (Joint Broker to Midwich)                    +44 (0) 20 3207 7800

Ben Wright / Richard Andrews
 FTI Consulting                                         +44 (0) 20 3727 1000

Alex Beagley / Tom Hufton / Rafaella de Freitas

 

About Midwich Group

 

Midwich Group is a specialist AV distributor, with operations in the UK and
Ireland, EMEA, Asia Pacific and North America. The Group's long-standing
relationships with over 600 vendors, including blue-chip organisations,
support a comprehensive product portfolio across major audio visual categories
such as displays, projectors, technical AV, broadcast, professional audio,
lighting and unified communications. 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 22,000 trade
customers, most of which are professional AV integrators and IT resellers
serving sectors such as corporate, education, retail, residential and
hospitality.

 

Initially a UK only distributor, the Group now has over 1,800 employees across
the UK and Ireland, EMEA, North America and Asia Pacific. 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
(http://www.midwichgroupplc.com/)

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