Stealth Group enhances market presence with $9.5m acquisition of Force Technology
Stealth Group (ASX: SGI) has accelerated its direct-to-consumer strategy with the $9.5 million acquisition of wholesale mobile phone accessory distributor Force Technology International.
Force markets its products through 3,310 retail reseller outlets across Australia, with approximately 48% of sales generated from its own-label and private-label products.
It reported a $44m revenue for the 2024 financial year with a 6% normalised EBITDA.
Cost synergies
On completion of the acquisition, Stealth will introduce its products into Force’s customer base to access the reseller stores and broaden its market footprint.
In return, Force will gain exposure to Stealth’s 8,000 customer accounts in the business & trade sector, providing the opportunity to significantly increase its share of this market.
Projected revenue for the combined businesses sits at $159m, with an EBITDA of $8.5m.
Expected cost synergies will be approximately $1.2m per year, with new margin dollars of around $2.3m from Force products through cross-selling and new brands.
Full benefits are expected to be realised by the second year after the transaction.
Force’s leadership and management executives will continue in their roles, supported by Stealth’s corporate team.
Leading alternative
Stealth managing director Mike Arnold said the acquisition would reinforce a commitment to becoming Australia’s leading market alternative to the majors.
“This acquisition marks a significant milestone and an exciting new chapter for both companies,” he said.
“We are now strategically positioned to leverage Force’s extensive distribution network and customer base, while providing it with new customer channels in business and trade.”
“This move will accelerate our growth, introduce new products including our own-label range, and enhance our market penetration.”
“We believe the synergies, combined with expanded customer channels and increased operational efficiencies, will drive significant value for Stealth, enhancing our competitive edge and delivering stronger returns for our shareholders.”
Terms of the deal
Under the terms of the acquisition, Stealth will issue 14.4 million new shares to Force at roughly $0.24 each, equating to approximately $3.5m.
A $6m loan facility to Force held with the Commonwealth Bank will be assumed by Stealth as part of the consideration.
A one-off out-performance incentive may be payable in cash to Force for the financial year 2026 period if Force achieves an EBITDA exceeding $2.5m.
On completion of the deal, the two participants will collectively own 12.52% of Stealth’s total shares on issue.