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| Hollywood treatment for makers of the million dollar hi-fi |
| Written by Sam Fountain | |
| Wednesday, 12 December 2007 | |
 Who wants to be a billionnaire? There could be more Ferrari moments on the way for the management and staff at Meridian Audio Meridian Audio, which sells a home entertainment system with a $1m price tag and became the first audio firm to carry dual branding with Ferrari, is no stranger to affluence but this new affiliation has put the small Huntingdon-based company in a league with America’s version of royalty. The deal will see the Muse group, headed by Arnon Milchan, acquire a 48 per cent stake in the firm and inject the cash that Meridian’s co-founder, Bob Stuart believes will quadruple the size of the company over the next five years. In true Hollywood style, film and TV producer, Milchan put together a group of ‘friends,’ including the likes of Rupert Murdoch, the former chief of Warner Bros, and the chairman of luxury brand group Richemont, to invest in the high-end audio firm, after visiting the Huntingdon factory to see its hand-made products being crafted. “The reason we met all these big guys, who all turned out to be owners of Meridian installations, was because Arnon [Milchan] was buying his second installation, and said that he’d very much like to see the factory,” said Stuart, co-founder and CTO of Meridian. “So he came up, and when he was here we just started talking. Meridian wasn’t looking for an investment partner at all, but he asked if we were interested in a partner. “He said that the way in which businesses grow is through network contacts and that he had a number of friends who would each be good for different areas of the business.” Milchan reportedly said that the first time he came to Cambridge, Meridian was “a small, traditional British thing” where everything was handmade, and told the guys at the firm that it could be a thousand times bigger and could be turned into a billion-dollar company. “In the next five years, we’d like to at least quadruple in size,” said Stuart. “This year we’re on target for 50 per cent growth, whereas last year it was more like five per cent. “One of the reasons I was interested in talking with Muse is because we’d always known we would build a company with a great brand, but we are really a company of engineers. “We make nice things, but weren’t hugely successful at marketing. Being shown world-class methods of marketing and having Muse bring awareness to what we do was what interested me most.” The Muse group, which was formed by Milchan specifically for this investment, comprises some extremely connected figures in media and entertainment. The chairman of luxury brand group Richemont, owner of Cartier and Van Cleef & Arpels, and the head of investment group Triarc, which owns Heinz and a stake in Tiffany’s contribute significant marketing clout. “Just look at the history of some of things the Richemont group has done and you can see that they understand it. “But they also understand distribution, retail, networking and marketing,” said Stuart. “Richemont is probably the world’s master at turning a brand into a recognised luxury brand, bringing really good companies up to the status of recognised companies. “We think that they’re the right group for us, we’re tremendously excited.” Looking at what interested Milchan enough to make a visit to the ‘small, traditional British thing,’ it is easy to recognise what attracted some of the world’s biggest investors to Huntingdon. Meridian has been crafting some of the world’s finest audio equipment in the region since the company was founded in 1977 by Stuart and Allen Boothroyd, an industrial designer. The company boasts a pedigree unmatched by any other audio equipment firm in the UK, possibly the world. It was the first company in the country to make a CD player in 1984 and played a very large role in digital technology as the equipment progressed. “We started out building amplifiers and speakers and over the years we have been very much at the forefront of a number of developments, such as compact discs,” Stuart said. “We were also very early into surround sound and DVD. We were the first company in the UK to make a DVD player. We are very much an engineering company, and also a technology company. We invented a lot of the coding systems for discs, which were adopted as standard for DVDs in the 90s. “We partnered with Dolby, who licensed the technology, and have worked closely with them ever since. “We started 30 years ago in St Ives and ended up in Huntingdon, making high-end, high value, high finish equipment, which is all hand made. We sell to 56 countries in total, and 80 per cent of our sales are exports with America the biggest market. “Ours is a niche business so has grown steadily and been pretty much self financed over the last 30 years. The most expensive system we’ve sold so far included eight of our most expensive speakers, and cost about $1m. We do sell that from time to time, in the US and Saudi Arabia, but not really in Godmanchester.” The transformation into a recognised company has already begun as talks actually began between the two groups more than two years ago; investment has already generated the uptake of numerous staff, mainly within sales & marketing. “The biggest increases have been in marketing and sales to help with the initiatives, but we’ve also added to the engineering team,” said Stuart. “Greater funding has allowed us to take on a number of new staff: a new director of marketing, Graham Taylor – who has been director of marketing for Bang and Olufsen for 12 years – a new CEO, a new director of sales and numerous new sales positions within the UK and abroad.” Stuart believes that much of the 50 per cent growth seen this year is down to a collaboration with Ferrari, a story Business Weekly covered in February. “A lot of the activity this year was caused by the F80 project, we’ll likely see the effect of the new collaboration next year,” he said. The F80 is a home entertainment system blending Meridian’s near flawless audio capabilities with Ferrari’s state-of-the-art composite materials know-how. The desktop system, which with a retail price of just £1,495 is at the very low end of Meridian’s product range, was designed to widen the awareness of Meridian’s products. Stuart said: “The F80 has a halo affect on the business, because it’s an ambassador for what we do – it gets people talking about us. It has been successful already, but is by no means finished. We have only released it in half the planned countries.” |
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