By Chris Nicholls
SYDNEY: TEAC Australia has changed hands for the third time in two years, with waste management and recycling company Austral Waste Group purchasing the company for $24 million.
The purchase was based on 10 times TEAC Australia’s current year earnings. However, current owners TT International will retain indirect ownership of the company, as Austral’s purchase was funded by an issuance of 120 million new shares, 87 per cent of which were sold to TTI.
As a result of the move into consumer electronics, Austral Waste will divest its waste disposal business to one of the current directors, after it sold the business for approximately $7.2 million.
All directors other than independent chairman Mark Ewing will step down from the board and be replaced by TTI nominees, including James Phoon, TEAC Australia’s current managing director.
Ewing said the company decided on the move after increasing pressure in the waste management sector from rival Transpacific.
“We had a plan in relation to acquisition of waste assets with Austral Waste. We weren’t able to achieve that. The waste industry has got pretty hot in the last couple of years. Transpacific [were] really buying up everything that was out there and we weren’t really able to make the acquisitions or get the volume of business into Austral Waste that we wanted to. So we took the decision that we would privatise the company and look for another opportunity.”
“We looked at a number of businesses and the TEAC one, we were very impressed with the plan TT International had for the business.”
“We felt this would be a very good opportunity for the existing shareholders in Austral, albeit that we’re moving away from a waste profile to an electronics profile.”
Ewing said TTI moved to purchase Austral to help expand the Teac business.
“They [TTI] wanted to establish TEAC in its own righ here in Australia, rather than as a subsidiary. They clearly have an interest in maintaining control and this was the way they selected for establishing [the brand].”
Teac’s sales operations and strategy will not be affected by the sale and purchase, said Ewing, who said TTI would also expand the brand into Australia’s surrounding countries and eventually into South East Asia.