Tweeter to buy Sound Advice - Tweeter Home Entertainment and Sound Advice - Brief Article

DSN Retailing Today, June 18, 2001 by Doug Desjardins

CANTON, MASS. -- Tweeter Home Entertainment continued its quest for growth through the acquisition earlier this month of Florida-based retailer Sound Advice. The 105-unit Massachusetts-based consumer electronics chain plans to purchase 33-unit Sound Advice in a stock swap deal worth an estimated $150 million. Like Tweeter, Sound Advice specializes in selling mid-level to high-end audio and video products, including home and car stereo systems, camcorders and DVD players.

"Sound Advice is an excellent company with great management and the same positioning in the market that we have," said Anne-Marie Boucher, director of public relations for Tweeter. "It's a great acquisition because they're in an important market that we would never have entered if we had to go head-to-head with them."

Under terms of the deal, Sound Advice shareholders will swap their shares for Tweeter stock as long as the price of its stock remains between $21 and $30. The deal would be canceled only if Tweeter's price per share fell below $18. The merger is still subject to shareholder and regulatory approval and is scheduled to close Sept. 1.

News of the merger sent Sound Advice's stock soaring from $15 on June 4 to $26.15 on June 7. Tweeter's stock also saw a bump, rising from $26.30 on June 4 to $28.15 on June 7.

Sound Advice president and ceo Peter Beshouri said the decision to merge with Tweeter was a simple matter of having a good offer at the right time. "Our stock has been around $10 lately, and I didn't want to have someone come in and offer $15a share and have it look like a good deal for shareholders," said Beshouri.

The merger should also be a seamless transition for employees. Sound Advice, founded in 1974, will keep its name for at least the next two years and will not undergo any changes at the store level. "We'll continue to run the company as an independent entity," said Beshouri. "We have a game plan for the next few years and Tweeter has bought into that."

The retailer currently operates 24 stores under the Sound Advice banner, along with five Bang & Olufsen Audio Sales outlets and two Showcase Entertainment Stores in Arizona. Beshouri said Sound Advice plans to open four new stores next year.

For Tweeter, the Sound Ad vice merger is a logical extension of a growth strategy it started five years ago when it began to branch out beyond its roots in Massachusetts.

"Our plan is to expand by acquiring other companies through mergers and acquisitions and add stores through organic growth," said Boucher, adding that Tweeter targets mid-level to high-end audio and video retailers.

Since then, Tweeter has expanded into the Mid-Atlantic states, Texas and into Georgia and North Carolina with the purchase of retailer HiFi Buys. Two years ago, Tweeter bought the Dow Electronics chain in San Diego to establish a foothold on the West Coast.

Boucher said Tweeter will increase its store count to 150 by the end of September with the acquisition of Sound Advice and the opening of new stores.