Earlier this year Synnex Canada CEO Jim Estill opened a 600,000 square foot warehouse in Guelph, Ont.On Tuesday he revealed what he’ll put in it: Consumer electronics products from his latest acquisition.The company is buying most of the assets of the Redmond Group of Companies, which are the exclusive Canadian distributors for audio, video electronics, home office and appliance brands including SanDisk, Citizen, Electrohome, Koss, Magnasonic Sylvania Uniden and Cobra.
“This clearly solidifies us in the consumer electronics space,” Estill said in an interview.
The deal is contingent on approval by the federal competition bureau, but if it goes through Synnex will gain the ability to distribute camera memory cards, clock radios, TVs and cordless telephones through its NEXCE division.
It will pay about $45 million plus assuming $10 million in Redmond debt.
The deal puts Synnex Canada deeper into the non-IT consumer electronics space, which began when it created NEXCE last fall to target resellers outside the traditional computer VAR market.
The Redmond Group (RGC) was formed in the past three years by company president Andy Redmond when he bought Jutan International in 2004, then purchased AVS Technologies of Montreal and Sonigem Products (formerly ML Products) of Markham, Ont. in 2005.
He did it with the help of financing from Newport Partners Income Fund, which became a part-owner of RGC.
It sells to some 10,000 Canadian retailers, including Wal-Mart, The Bay, Zellers, Canadian Tire, Loblaws and Costco.
Among RGC’s most recent moves was buying the rights to the Electrohome name from Electrohome Ltd., once a leading Canadian manufacturer of TVs and radios.
According to a company Web site, Andy Redmond founded a successful multi-location video rental operation and co- ownership in a chain of six consumer electronics stores. From there he established a sales agency, followed by the creation of Jonic International of Mississauga, Ont., a CE distributor, in the late 1990s.
According to a Synnex statement, in the 12 months ending Sept. 30, 2006, RGC had revenues of $300 million. However, Synnex doesn’t expect to retain the entire revenue run rate when the deal closes, which is expected at the end of April.
Estill called the deal “a huge step forward” for Synnex Canada in the CE space, which will also help his company achieve economies of scale.
Most of the products, he said, will appeal more to CE retailers than Synnex’s traditional IT channel partners.
All of RGP’s sales, marketing and product staff will be retained and virtually all of the executive. Andy Redmond will have a two-year contract to stay as a consultant, in part helping with the corporate integration.
As for making other acquisitions, Estill – who built his EMJ Data Systems on buying companies before selling to Synnex Corp. – replied, “I don’t sit around. Growth makes a company healthy.”
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