Tandem boosts ecommerce business with £2.1m acquisition

CYCLING, toys and mobility equipment supplier Tandem has expanded its ecommerce operations with the acquisition of a leisure products supplier.

The Birmingham-based group is investing £2.1m to acquire 100% of the share capital of leisure products business, E.S.C. (Europe) Ltd.

The initial consideration will be paid in cash with an adjustment for net assets in excess of or below £1.5m following the preparation of completion accounts.  Additional payments of approximately £0.55m but up to a maximum of £0.75m will be paid out subject to the firm meeting performance targets.

The acquisition will be funded from the company’s existing cash resources and a new £1.5m five-year loan provided by HSBC. Interest on the loan will be charged at a rate of 2.35% above base rate.
 
ESC is a leading online retailer of gazebos, party tents, household, kitchen and fishing products under the Airwave, Windbar, Jack Stonehouse and Carpzone brands.  

The Suffolk-based business made a profit of £0.4m for the year ended October 31, 2013.  Net assets were £1m as of the same date and are expected to be approximately £1.7m on completion.  Jonathan Fagg and Mark Fagg, the directors and existing joint 100% shareholders of the acquisition, will continue as directors of ESC.
 
Tandem said it believed that ESC would complement the group’s existing ecommerce business, Pro Rider, and broaden the online product range. The acquisition is expected to be earnings enhancing in its first full year of ownership and will further strengthen the group’s distribution channels and its customer base.

ESC will continue on a stand-alone basis but is expected to be integrated into the group’s existing Northampton premises by early 2016.

Tandem chairman Mervyn Keene said: “We are pleased that we have made this acquisition which will enable us to build further on our online trading platforms.  Many of the products in the ESC portfolio complement our existing sports and leisure ranges and we look forward to the prospect of further growth.”