Fone Zone acquires the Next Byte Apple retail business

By Martin Vedris

SYDNEY: Fone Zone Group Limited (ASX: FZN), currently Telstra’s largest premium dealer with over 140 stores, has announced its acquisition of Next Byte, Australia’s largest specialist retailer of Apple and Apple-related products and services.

Fone Zone CEOavid McMahon, said Next Byte represented an excellent strategic acquisition for the Fone Zone group.

“The acquisition of Next Byte will broaden Fone Zone’s base of strategic partnerships and income streams, providing a significantly enhanced platform for future growth in the converging communications, computer and internet markets,” McMahon explained in a statement.

The total purchase consideration will comprise a $21 million cash payment funded from increased facilities with Fone Zone’s existing bank, and the issue of 16.1 million ordinary shares (12.86% of total ordinary shares on issue).

Based on Fone Zone’s 30 day Volume Weighted Average Price (VWAP) of 62 cents, the purchase consideration represents a multiple of approximately five times Next Byte’s FY2007 normalised EBIT of $6.3 million, which was achieved on revenues of $105 million — a six per cent return.

“This is a significant milestone transaction for Fone Zone. It enables us to complement our strong product offerings and exclusive relationship with Telstra in the mobile phone market with an equally strong proposition in the field of cutting edge computers and consumer electronics,” McMahon added.

Next Byte has a track record of growth, strong financial results and strategic acquisitions.

“With 17 Next Byte stores around Australia, there is an exciting opportunity for additional growth and Fone Zone’s specialist retail experience will clearly enhance Next Byte’s ability to execute this strategy,” McMahon revealed.

According to McMahon, Fone Zone and Next Byte share similar strengths in solution selling through excellent customer service and it is this similarity that will likely see Fone Zone stores extending their current product range to include selected Apple products.

The existing owners of Next Byte have agreed to three year employment contracts.

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