ProSoundWeb | Danes Invade Britain Again TC Group to Acquire TGI PLC for $21.5 million

Danes Invade Britain Again TC Group to Acquire TGI PLC for $21.5 million
By Christian Doering, Marketing Partner, Dynamic Market Systems LLC

The Board of Directors of TGI PLC, which owns Tannoy, Martin Audio, Lab Gruppen and Goodmans Loudspeakers Limited (GLL), has recommended that its shareholders accept a cash offer of 68.5 pence per share from privately held TC Group, headquartered at Risskov, Denmark. If accepted, the offer would value TGI, which made $2.4 million last year on sales of $68.2 million, at $21.5 million. TC Group's offer represents about 12 times last year's earning per share (5.7p), and a slight premium over TGI's 52 week high share price (67.6p). The stock, which has traded as low as 34.3p in the last year, had been static at 51p, or 9 times '01 earnings per share. TC Group has irrevocable undertakings to accept the offer in respect of 8,318,955 TGI shares, representing approximately 38.41% of the company.

Michael Windsor, TGI chairman, says: "The board believes the offer represents a fair price for the business and enables shareholders to crystallise the value of their investment." TGI had just announced sales and profits that were below analysts' (both of them) estimates for the first half of 2001, which would make a share price rebound unlikely.

TGI's first half report for the fiscal year ending March '02 says that its professional products are doing well, with Lab Gruppen's new iP amplifiers leading the gains. The sales and profits shortfall was blamed on poor performance by Tannoy's European hifi distributor. Tannoy has already formed new distribution alliances in Italy, France, Spain and Germany and put a direct sales force in place in the UK. While chairman Windsor expects a "satisfactory performance" for the fiscal year, there's nothing on the horizon that would propel a 34.3% jump in the share price, which TGI owners can now "crystallize" by accepting the TC Group offer.