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| Handleman To Acquire Crave Entertainment Group Handleman Company announced that it has entered into a purchase agreement to acquire privately-owned Crave Entertainment Group, Inc. ("CEG"), a distributor of video game software, hardware and accessories to major retailers throughout the United States. Products distributed by CEG support all video game platforms, including platforms provided by Sony, Nintendo and Microsoft. The transaction, which is expected to close in the next 45 days, is subject to regulatory approvals, the obtaining of adequate financing and other customary closing conditions. CEG, headquartered in Newport Beach, California, distributes video game software, hardware and accessories to more than 30, 000 retail stores. Customers include: Sam's Club, Costco, Toys"R"Us, GameStop, Best Buy, Target, KoB Toys, Army & Air Force Exchange Service (AAFES), and other national and regional retailers. CEG's sales for the 12 months ended August 2005 were approximately $239 million, with its top 10 customers representing less than 60% of total sales. CEG purchases video game software, hardware and accessories from several different suppliers, including major industry publishers and hardware manufacturers. In addition to the distribution of video game software, hardware and accessories, CEG offers its retail customers: Integrated vendor managed inventory, Direct-to-store shipments of shelf ready products, Assortment planning and product procurement, Promotional planning and execution, Merchandising and display support, and Dedicated support personnel. The purchase price for CEG is $72 million plus the assumption of working capital debt. The transaction also includes additional consideration based upon achievement of performance goals through calendar year 2007 that could add up to an additional $23 million to the purchase price. The purchase will be paid for in cash and is expected to result in an accretion for the second half of Handleman Company's fiscal year 2006 of approximately $.10 per fully diluted share, depending on the date the transaction is closed and final allocation of the purchase price. For the twelve months ended August 2005, CEG had earnings before interest and taxes of $15.4 million. Handleman Company's suite of proprietary category management systems, programs and processes will be made available to CEG to further enhance its category management and distribution of video game software. Senior executives of CEG will continue with the company, including Nima Taghavi, Founder and Chief Executive Officer; Robert Dyer, Chief Operating Officer; and Michael Maas, President. write your comments about the article :: © 2005 Game News :: home page |