US purchase first in a fresh spree for Midwich

Midwich, a globally successful audio visual distributor based in Norfolk, is expanding into the lucrative US market through the $46.1 million acquisition of Indiana company Starin Marketing Inc.

It will pay $27.1m cash and assume up to $19m in existing debt facilities. AIM-quoted Midwich intends to raise gross proceeds of £39.7m via an accelerated bookbuild to repay debt facilities drawn down to fund the acquisition and provide additional resources to finance further acquisitions that it is pursuing in the short term. 

The group says it expects to deploy most of the proceeds in the current financial year.

The acquisition is expected to be modestly earnings accretive in the current financial year, including the impact of the total proposed fundraise, with future acquisitions expected to add further accretion.

The deal represents a significant strategic investment by Midwich to enter North America, the world’s largest AV market, and will also provide extended geographical support for Midwich’s global customers. 

It provides a foundation for the group’s plans for US expansion with the benefit of a well-established market position, experienced management team and large customer base.

For the year ended December 31, Starin delivered unaudited revenue of $222.7m, gross profit of $29.6m and EBITDA of $6.1m.

Midwich managing director Stephen Fenby said: “The acquisition of Starin is a significant day in Midwich Group’s history, marking our entry into North America, the largest AV market in the world. 

“Starin’s exposure to, and relationships in, the growing unified communications segment will be greatly beneficial to Midwich as it seeks to increase revenues in this fast growing AV sub sector across its global network.”

Whilst market conditions were challenging throughout 2019, Midwich says it made good progress and expects to report full-year revenue of more than £685m (up over 19 per cent on 2018) with full year organic revenue growth of six per cent before the effect of foreign exchange rates and acquisitions.