Renaissance sells IT distribution unit to Exeed
BUSINESSDESK: Renaissance Corp, which used to have a monopoly on national distribution of Apple products, will sell its IT distribution division to Exeed Ltd, halving the size of its balance sheet.
IT distributor Exeed will take over the distribution of Apple, Fuji, Cygnet, Belkin and Ozaki and acquire all the company's stock, valued at about $2.5 million. It will pay $2.3 million in goodwill and about $570,000 for fixed assets.
A shareholder meeting will be held on July 6 to approve the deal.
"The time had come to get bigger in the industry or get out," Renaissance chief executive Shaun Rendell said. "We admire the Exeed team and we are pleased, with Apple's blessing and subject to shareholder approval, to hand the brand on to them."
Under the agreement the Christchurch-based company will exit the distribution business. It will be broken into two parts, a specialist Apple retailer, Yoobee and a specialist education institution, Yoobee Design College, formerly known as Natcoll.
The sale means sales more than halve to $80 million from $180 million, based on the company’s budget for 2012. Net interest bearing debt is wiped out.
“The shape of the company changes dramatically. The balance sheet is halved,” chairman Colin Giffney said. “The operating risk around the distribution business is eliminated.
"The remaining businesses are much less volatile. Neither of the businesses is working-capital hungry.”
In April, Renaissance declared a $239,000 profit before tax and a $1.9 million post-tax operating surplus for the six months ended March 31. That followed receipt of $2.5 million in insurance payments.
The company was hit by two major blows in 2010 and 2011 – the introduction of a second licensed Apple products distributor and the Christchurch earthquakes.
The biggest blow came in 2008 (see share price chart above) when Apple began selling its products direct to the public through its website, ending Renaissance's long-held exclusivity.
Shares in Renaissance have gained 5% this year and last traded at 10 cents.