Music distributor the Handleman Company has announced that it has entered into a purchase agreement to acquire the privately-owned U.S. game distributor and publisher the Crave Entertainment Group for $72 million, plus the assumption of working capital debt. The transaction also includes possible performance goal-related payouts of an additional $23 million.
Crave, headquartered in Newport Beach, California, includes game publisher Crave Entertainment and game distributor SVG Distribution, which distributes video game software, hardware and accessories to more than 30,000 retail stores in North America. The senior staff, including Nima Taghavi, CEO; Rob Dyer, COO; and Michael Maas, president will remain the same after its acquisition.
Crave Entertainment's publishing division, which exclusively publishes titles in the U.S., has recently released titles such as World Championship Poker 2, The Bible Game, and Pinball Hall Of Fame, as well as publishing titles in the Tokyo Xtreme Racer series on North America. Customers of CEG's distribution arm, which makes up the majority of the firm's business, include Sam's Club, Costco, Toys"R"Us, GameStop, Best Buy, Target, KB Toys, Army & Air Force Exchange Service (AAFES), and other national and regional retailers. CEG's overall sales for the 12 months ended August 2005 were approximately $240 million.
Stephen Strome, Handleman Company Chairman and Chief Executive Officer commented: "The acquisition of CEG expands our customer base, broadens our product line and will be immediately accretive to earnings. Video game software is one of the fastest growing entertainment product lines, with industry growth expected to exceed an 8% compounded annual growth rate over the next four years. In addition, we expect the combination of Handleman Company and CEG will provide growth opportunities for both organizations through cross-selling customers, services and products."