Midwich expands in Germany with AV distie acquisition

British distributor is acquiring an initial 51 per cent of prodyTel with option to buy remaining 49 per cent in 2024

Midwich Group today announced it is acquiring professional audio and technical solutions products distributor prodyTel Distribution.

Through its German subsidiary Kern & Stelly Medientechnik, Midwich is set to acquire 51 per cent of the prodyTel's share capital for initial cash consideration of €8.5m (£7.4m).

Put/call options are in place to facilitate the purchase of the remaining 49 per cent of the share capital in June 2024 for a fixed cash consideration of €8.1m (£7.1m). An additional performance linked amount of up to €5.5m (approximately £4.8m) will be payable in cash in 2026.

Stephen Fenby, Midwich Group MD, commented: "We are delighted to have reached an agreement to acquire prodyTel, which will strengthen our technology offering in the DACH region.

"prodyTel has a strong reputation in the market which has enabled it to attract top tier brands. Customers greatly value the expertise the company is able to offer, and will now be able to benefit from the combined portfolio of prodyTel and Kern & Stelly.

"We look forward to working with Christian and his team to build on the success the business has experienced in recent years."

Who are prodyTel?

Based in Stein, Germany prodyTel was founded in 2003, originally as a manufacturer of audio codecs before switching its focus to distribution in 2014.

From there, it has developed a vendor portfolio that includes brands such as Biamp, Aver and Jabra, with a particular focus on the corporate and education market.

The distie operates across Germany and employs 30 staff.

The newly acquired group supplements its core distribution services with a suite of value-add services for its trade customers throughout its home territory.

These services include the prodyTel Academy, offering technology seminars, training courses and product demonstrations to customers.

In its latest financial statements, for the year ended 31 December 2022, the company generated revenues of €22m (£19.2m) and profit before tax of €4m (£3.5m).

Gross assets at 31 December 2022 were €6.3m (£5.6m).

Christian Carrero, MD of ProdyTel said: "Not only have I developed a lot of personal relationships over the last 20 years with many people within the Midwich family, but prodyTel has often found itself working alongside Kern & Stelly on common projects.

"From these interactions, I had already developed a positive feeling about the corporate culture in Kern & Stelly.

"I had quite a few offers to sell my company over the years, but based upon these past interactions, when the opportunity presented itself to join the Midwich family, it seemed only logical.

"I believe this deal can bring prodyTel and its people to the next level in distribution and equally will allow us to share our expertise in audio and AV project management to support Kern & Stelly to further grow its business in Germany."

Completion of the deal is subject to merger control clearance from the German Federal Cartel Office.

Midwich's latest results

In its H1 2023 results, Midwich reported growth across EMEA and North America, but saw a decline in the UK market.

Revenues for the six months ended 30 June 2023 grew 7.4 per cent to £610.4m.

Gross profit was up 17.5 per cent to £99.6m in H1 2023.

However, the Norfolk-based distributor saw revenues decline slightly by 2.2 per cent to £234m in the UK & Ireland.