GADGET retailer RED5 has been bought by larger rival Menkind in a deal that will see its co-founders exit the business.
Jonathan Elvidge, who set up the Gadget Shop in 1991, and Joth Baron launched RED5 in 2005 and it has grown to a business with nine shops, four concessions and an online store. The Hull business, which employs 220 people, also supplies products to retailers including Boots and Argos.
RED5 has doubled its profits for the last three years and has reported pre-tax profits of £1.3m for the year to March 2015, from sales of £18m. Menkind is around twice as big, with annual sales of £35m and a workforce of 450 people.
Menkind plans to continuing operating both brands and will keep RED5’s existing stores, warehouse and offices.
Paul Kraftman, chief executive and founder at Menkind, said: “Both Menkind and RED5 have distinctly different propositions and customer bases, which each brand owns within its section of the market. Whilst RED5 tend to attract younger buyers, Menkind’s wider gifting range appeals to the more mature customer. We feel this acquisition is key to the continued growth of Menkind, and anticipate it helping us to increase our market share and accelerate our expansion.”
Entrepreneur Peter Wilkinson, who was involved in Freeserve and the Gadget Shop, owned 45% of RED5, with Mr Elvidge having 28.5% and Mr Baron holding 18.5%.
All three have stepped down as directors, and RED5’s co-founders will act as consultants to the management team and be “actively involved in the business during the transition period”.
“We are thrilled that Menkind has acquired RED5 – it was previously a competitor that we have had tremendous respect for, and we are delighted to come together in this move,” said Mr Elvidge.
“We feel this acquisition will help to cement the future success of the RED5 business, and that both companies will benefit from additional support, resource, sector experience and expertise as a result.”
RED5 was advised by Graham Mackenzie and Victoria Smithers from Walker Morris corporate team.
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