No Major Changes Expected at Klipsch after Audiovox Purchase

Klipsch Group will be “run as a stand-alone operation in Indianapolis, and will continue under the leadership of the current management team” after its sale to Audiovox, the buyer said late Thursday. No job cuts are expected at Klipsch from the definitive deal that Audiovox signed to acquire the speaker company and its global subsidiaries for $166 million. Audiovox said last month it had signed a non-binding term sheet to buy all shares of Klipsch Group and the subsidiaries (CED Jan 12 p4).

Audiovox said Thursday it expects to finance the acquisition with cash on hand and a new asset-based revolving credit facility from Wells Fargo Capital Finance that will also be used for operating capital. The combined assets of Audiovox and Klipsch will secure the borrowings under the financing commitments. Audiovox said it “expects the transaction to close within 30 days,” when Klipsch will become an Audiovox subsidiary. After the sale closes, Audiovox said, it “expects to have excess availability under the credit facility for general corporate purposes.” But it said there’s “no assurance at this time that this transaction will be completed.”

Audiovox said it expects the purchase “to be accretive to cash flow and earnings” for its fiscal year starting in March, “inclusive of all costs for financing.” Revenue for the combined companies totaled about $742.2 million for the 12 months through November, compared with $573.1 million for Audiovox alone, it said.

The purchase will add the Klipsch brands Klipsch, Jamo, Energy and Mirage to Audiovox’s growing “family of companies,” said Audiovox CEO Patrick Lavelle. Klipsch has “a strong and stable base of retail, e-commerce, commercial distribution, and professional installation business partners in North America, Europe and around the world,” he said. Klipsch will provide Audiovox with “an outstanding new distribution channel for our company to reach the home and commercial installation markets,” he said. Audiovox sees “many opportunities to leverage distribution, global brand development, and brand expansion in areas such as OEM automotive and professional audio,” he said. The purchase will also accelerate “domestic and global growth” for Klipsch, said its CEO, Fred Klipsch.