As companies worldwide design plans to pull themselves out of the FY22 financial funk, Aussie-based advanced tech equipment company Ambertech (ASX: AMO) is counting on acquisitions. In keeping with that, it is set to acquire distributor Convoy International for about $3 million.
Convoy International is an importer and distributor of hi-fi products, like speakers, amplifiers and more music-related items. Established in 1965, the company has a legacy spanning over five decades, evident in its brand portfolio which includes Bluesound, NAD Electronics, JBL Synthesis, Cary Audio and more. It fits right into Ambertech’s forté, which involves equipping Australian and New Zealand-based installations with their audio-visual needs.
The amount of the acquisition will range between $2.8 and $3 million. It will include inventory and accounts receivable, business use assets and goodwill of around $500k. The deal will be funded using existing the Company’s cash reserves. The transaction is expected to bring in initial incremental revenue growth of $4 to $5 million annually—music to the Company’s hypothetical ears.
Managing Director of Ambertech, Peter Amos, said, “We are very pleased to be adding prestigious Convoy brands to our portfolio such as NAD, Bluesound, and JBL Home. These brands allow Ambertech to expand our solutions for residential installers and specialist HiFi dealers and consolidate our position as the supplier of choice to these markets.”
In December last year, the Company secured another major win when Network 10 asked it to replace the media company’s news and production systems. Following announcements like such, Ambertech anticipates that its revenue for December 2022 would be in the range of $39 million to $41 million, up around $1 million from its December 2021 results—boosting the overall FY23 results.
In FY22, the Company’s earnings—like that of most others’—fell from $8 million in FY21 to $7.5 million. As it grappled with supply chain issues, late deliveries, high freight costs and Covid lockdowns, Ambertech turned its attention to acquisitions to manage risk. Seeing how it might be getting $4 to $5 million from this $3 million deal, the Company might be onto something.
Since the death of its founder Geoff Matthews in 2019, Convoy International has been passed to a couple of people, none of whom have managed to keep the business running successfully. Even under new leadership, i.e. Matthews’s son, a firefighter and paramedic, the company struggles to manage supply.
From the looks of it, through this acquisition, Ambertech is throwing Convoy a lifeline while also pulling itself up to financial security.
Chief Operating Officer at Ambertech, Robert Glasson, added, “We have established a strong set of acquisition criteria as a fundamental element of our growth strategy, and Convoy is a business that we have been following for many years. Identifying premium brands, strategic relationships and quality people remains key.”
The acquisition—a key aspect of the Company’s strategic growth plan—will be completed by around January 31, 2023. Will Convoy bring Ambertech’s revenue back up? Only the FY23 results will reveal.
Alinda is a Business Reporter for The Sentiment
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