Home » News » Business » Imation to acquire assets of Memcorp for $60 million
Imation Corp. announced that it has entered into a definitive agreement to acquire certain assets of Memcorp Inc. and Memcorp Asia Limited (together known as "Memcorp") from privately held Hopper Radio of Florida, Inc.
The purchase price for the assets includes approximately $23 million in cash and $37.5 million in three-year notes, plus a potential earn-out of up to $20 million over three years, dependent on financial performance of the purchased business. Imation also expects to invest approximately $15 million in additional working capital after the acquisition closes. The transaction is expected to close in the third quarter of 2007, subject to customary closing conditions and governmental approvals.
Memcorp, a U.S.-based consumer electronics marketing and distribution company, had Memorex-branded sales in 2006 of approximately $190 million out of total sales of approximately $285 million, including other branded sales that are not a part of the transaction. Memcorp sells a range of video, audio and home electronics products through retailers in North America. Memcorp has been operating under a long-term license agreement for the Memorex brand. Imation will acquire all Memcorp sourcing, marketing and distribution operations, as well as Memcorp's recent three-year agreement with MTV Networks, a division of Viacom International, to design and distribute specialty consumer electronics items under certain of the Nickelodeon brands.
"This acquisition builds on our recent successful acquisition and integration of the Memorex brand, and allows us to gain full control and leverage of the Memorex brand worldwide," said Frank Russomanno, chief executive officer and president of Imation Corp. "Memcorp's product portfolio, global sourcing expertise and creative marketing and licensing capabilities in branded consumer electronics, strengthen and extend the powerful Memorex brand across a variety of products beyond removable media."
The acquisition will expand Imation's Memorex-branded presence at retail, broadening Imation's product portfolio to include Memorex-branded TVs and digital displays, including flat-panel LCDs and digital picture frames, iPod(TM) accessories, radios and MP3 players. The portfolio will also include digital cameras, home theater video and portable DVD players, karaoke systems and office products such as voice recorders and paper shredders.
"Bringing our brand licensing expertise in consumer electronics to a recognized global leader carrying one of the broadest portfolios of data storage brands and products is an exciting opportunity," said Barry Smith, founder, president and chief executive officer of Memcorp. "I am confident the acquisition will further strengthen the Memorex brand and complement Imation's total product portfolio while potentially extending the company's popular consumer brands to additional geographies and product categories."
Approximately 60 Memcorp employees from the company's U.S. and Hong Kong operations are expected to transfer to Imation as part of the acquisition.
Imation expects the transaction to be financially accretive, adding an estimated $0.09 to 0.12 EPS, contributing an estimated $10 to $12 million in operating income and adding approximately $200 million in annual revenue in the first full year of operation. As previously discussed when Imation reported its Q1 results on April 19, the Company has not updated its prior 2007 business outlook, but intends to update and revise it on May 22.