Audiovisual (AV) distributor Midwich has strengthened its presence in the North American market with an acquisition in Canada.
The UK-based wholesaler has bought the entire share capital of professional audio distributor SF Marketing (SFM) in a deal worth up to £27 million. Most of that will be paid on completion, with the remainder – partially dependent on operating performance – due after 12 months.
To fund the transaction – and other potential acquisitions – Midwich is looking to raise up to £50 million in the financial markets. This includes £2 million worth of shares that will be open to retail investors.
SFM was founded in 1978 and is headquartered near Montreal. In the 12 months to 31 May 2022, the company reported sales of around C$95 million (£57 million). Revenue for the financial year that ended less than two weeks ago is expected to be “materially ahead” of that number. Gross margin in FY2022 was more than 23% while adjusted EBIT was just over C$6.1 million.
“The Canadian AV market represents a significant opportunity for the group, and so it was important we found a high-quality business to partner with,” commented Midwich Managing Director Stephen Fenby.
This is Midwich’s second acquisition in North America – following its purchase of US-based Starin in 2020 – and its 29th overall. The distributor says it has a further six bolt-on opportunities in the pipeline that cover the North American, EMEA and UK & Ireland markets. It is “confident” the majority of these deals will close within the next six months.