Midwich : Acquisition of stake in Prase Engineering S.p.A

RNS Number : 7992O Midwich Group PLC 01 February 2019

1 February 2019

Midwich Group Plc

("Midwich" or "the Group")

Acquisition of majority stake in Prase Engineering S.p.A

Midwich, a specialist audio visual ("AV") distributor to the trade market with opera ons across the UK and Ireland, Con nental Europe andAsia-Pacific, is pleased to announce it has entered into a binding agreement to acquire 80% of the share capital of Prase Engineering S.p.A ("Prase" or "the Company"), an Italian value-added distributor of AV products .

Based near Venice, the Company was founded in 1993 by Alberto and Ennio Prase, both of whom will con nue to run the business, with Ennio as managing director and Alberto as sales director. Both will remain on the Board of Directors of Prase.

Prase is a specialist audio and visual distributor with a strong heritage in the solu on driven professional audio market where the business operates with high-end specialist brands, such as Shure and Biamp. More recently, the Company has successfully added key video brands Epson and LG to its portfolio.

The acquisi on of Prase marks Midwich's entry into Italy, a territory the Group has iden fied as important in its interna onal expansion. The acquisi on is further delivery of the Group's strategy to grow opera ons through a combination of organic development and selective acquisitions.

In the year ended 31 December 2017, the Company generated revenues of approximately €20.4 million and profit before tax of €2.2 million. Net assets were €10.9 million.

Stephen Fenby, the Midwich Group Managing Director, commented:

"We are delighted to welcome Ennio, Alberto and the Prase team to the Midwich Group. The Company has a very strong reputa on, not only in Italy, but also in the European AV market as a whole. As the market leading professional audio distributor in Italy, Prase has an excellent por>olio of vendor partners and a broad customer base which it services with an extensive range of value add support. This acquisi on adds to the Group's already formidable capability in the European professional and installa on audio sectors. We believe that with the acquisi on of Prase, Midwich now has a presence in countries represen ng over 80% of the European AV market"

Ennio Prase, Managing Director of Prase commented:

"When we were approached by the Midwich team, we quickly saw the benefits of being a part of the Group, and were par cularly excited about joining a business with a focus on specialist, value-add distribu on. Using the expertise and resources of Midwich, this new relationship will allow us to further accelerate Prase's growth.

Alberto and I are delighted to be joining the Midwich Group and are very much looking forward to working with our new colleagues."

Details of the Transaction

The purchase price comprises an ini al cash considera on of €7 million (approximately £6.1 million) followed by four fixed payments of an aggregate of €6.4 million (approximately £5.6 million) over the next two years. The acquisition is expected to be earnings enhancing in the first full year.

The consideration for the acquisition will be made from the Group's existing bank facilities.

Options are in place whereby the Group can purchase the remaining 20% of the Company in three years' time or later, based on the financial performance of the Company.

Note : Exchange rate used £1 = €1.15

Enquiries:

Midwich Group plc

Tel: [phone]

Stephen Fenby, Managing Director Stephen Lamb, Finance Director

Investec Bank plc

Tel: [phone]

James Rudd Carlton Nelson

FTI Consulting Alex Beagley Tom Hufton Fern Duncan

Tel: [phone]

Note to editors

Midwich is a specialist AV distributor to the trade market, with opera ons in the UK and Ireland, Con nental Europe and Asia-Pacific. The Group's long-standing rela onships with over 400 vendors, including blue-chip organisa ons, support a comprehensive product por>olio across major audio visual categories such as large format displays, projectors, digital signage and professional audio. The Group operates as the sole or largest in-country distributor for a number of its vendors in their respective product sets.

The Directors aIribute this posi on to the Group's technical exper se, extensive product knowledge and strong customer service offering built up over a number of years. The Group has a large and diverse base of approximately 14,000 customers, most of which are professional AV integrators and IT resellers serving sectors such as corporate, educa on, retail, residen al and hospitality. Although the Group does not sell directly to end users, it believes that the majority of its products are used by commercial and educa onal establishments rather than consumers.

Ini ally a UK only distributor, the Group now has over 800 employees across the UK and Ireland, Con nental Europe and Asia-Pacific. A core component of the Group's growth strategy is further expansion of its international operations and footprint into strategically targeted jurisdictions.

For further information, please visitwww.midwichgroupplc.com

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