Phil & Teds on lookout for more acquisitions
Following the successful purchase of Mountain Buggy, child-products firm phil&teds plans to continue its acquisition strategy overseas.
Phil&teds announced the purchase of Tritec Manufacturing and Mountain Buggy today. No details of the purchase price have been released.
This is the second company to be bought in recent weeks by phil&teds; the first was roof rack and automotive accessory business, Hubco.
Phil&teds chief executive and majority owner Campbell Gower says that the company will continue to look to buy other companies as it expands and will be looking particularly at those with “synergies in the juvenile space” and with “assets in the US and Europe.”
However, he was quick to rebut any idea that phil&teds might be keen for a stake in NZX-listed children’s clothing store Pumpkin Patch, which has retail stores in the US, Australia and the UK.
Expansion into the US and Europe are important because only 5% of the company’s sales are made in New Zealand – growth in the overseas markets is estimated at 50% year-on-year.
Mr Gower adds that it was more important to integrate newly purchased companies than to just going on a shopping spree.
“It is easy to buy, it is hard to integrate,” he adds.
Furthermore Mountain Buggy was not sold at a fire sale price, according to Mr Gower.
“It was a very, very full and fair price – we didn’t get it cheap,” he says.
Mr Gower says because the company had to make a quick purchase of the company to prevent permanent damage to the brand because of the receivership.
“There are lots of things we don’t know. We need to plan about how to manage the whole business,” he says.
So the company plans to take six months, allow receivers PricewaterhouseCoopers to continue to manage the manufacturing facility, and figure out how best to make the companies work together.
All of Phil&teds products are manufactured offshore so the company does not have any expertise in running a manufacturing facility.
Mr Gower admits it makes sense to produce in China not only because of the labour costs but because of easier regulation and because the proximity to northern hemisphere markets keeps freight costs down.
“Having said that we could learn a lot from these guys and we are not going to rush in and move it offshore,” he says.
Receiver John Fisk, who works for PricewaterhouseCoopers, says the company was working constructively with Phil&teds to ensure the whole process flows smoothly.
Tritec staff have been informed of the sale, and their current employment contracts will be extended to allow the important human capital to be retained within the company, he adds.
Mr Fisk expects to be able to pay off the employees and Inland Revenue but believes there will be a shortfall on the bank loan and unsecured creditors should not expect to receive anything.
The sale of Mountain Buggy has been quicker than expected – receivers had hoped to have it wrapped up by April 30.
Mr Fisk attributes this to the amount of interest in the company because of the quality of the brand and the product.
Receivers will be continuing to defend claims by Denmark-based company DK Intertrade that alleges the pushchair manufacturer breached a contract for distribution rights in Denmark.
DK Intertrade was granted an order in the Netherlands to freeze all of Mountain Buggy UK’s assets last month - the request was made because as unsecured creditor even if it wins there is no money in Mountain Buggy’s coffers to pay a court order.
Mountain Buggy UK is not in receivership and has not been sold to phil&teds.
Receivers for Mountain Buggy and DK Intertrade are scheduled to reappear at the High Court at Auckland on April 21.