Gear4music acquires AV Online
Gear4music has exchanged contracts on the acquisition of audio-visual retailer AV Online and its website domain name AV.com.
Subject to gaining FCA approval, the transaction is expected to complete in or around December 2021.
Founded in 2003 by Carl Pickles, AV Online operates from a 26,000 square foot warehouse, offices and showroom in Bacup, and sells audio-visual equipment such as home cinema systems, HiFi systems, speakers, cables, headphones and accessories.
In the year to 31 March 2021, the company’s revenues grew to £8.6 million from £5.6 million in the prior year while pre-tax profit rose to £1.2 million from a previous £0.4 million. Sales are mainly generated from its website, although it also sells through Amazon, the Bacup showroom and several smaller websites operated by the business, including hificables.co.uk.
Gear4music has agreed to pay £6.2 million for AV Online and £3 million for the AV.com domain name, which was not owned by AV Online and will be purchased in a separate transaction. The payments will be settled in cash drawn from the company’s £35 million revolving credit facility with HSBC. The purchase will include £2.5 million worth of inventory and a freehold warehouse property recently valued at £1.3 million.
In a statement, Gear4music said: “The board is confident that by moving the AV Online business onto Gear4music’s highly scalable bespoke ecommerce platform, rebranding the business to AV.com, developing its product ranges, and expanding into Europe, AV.com can quickly grow its revenues and profits. The board expects that the acquisitions will be earnings per share enhancing from FY23 onwards.”
Giving an update on recent trading, Gear4music said its UK revenue returned to growth during July and August, although trading in Europe was impacted by post Brexit border shipping challenges.
Andrew Wass (pictured), chief executive of Gear4music, said: “As previously announced, trading during Q1 FY22 was stronger than the board had expected although, as anticipated, behind the exceptional period of trading during FY21. UK sales have pleasingly returned to growth during July and August.
“As a result of the operational and commercial actions we are taking, and the acquisitions we are making, the board retains a high level of confidence that the group is well positioned to deliver on its long-term growth strategy.”
