Smartphone Cover Maker Zagg Up For Sale As Pen Maker Enters Bidding War
The battle for control of US smartphone and case brand Zagg is continuing with Acco Brands, owner of Swingline staplers and Artline pens now entering the arena.
What’s not known is whether Cellnet the Brisbane based distributor will hold onto the distribution rights if the Company is taken over by Acco Brands who have their own distribution operation in New South Wales.
Zagg which has sales of $60M and makes protective covers for iPhones, Android phones and other devices, has signed confidentiality agreements with two potential buyers who are currently running due diligence on the Company that has a strong presence in Australia at retailers such as JB Hi Fi, Bing Lee, Harvey Norman and Betta Electrical.
The other bidder is an undisclosed private equity firm that has sent Zagg’s board a letter saying it would pay as much as $9 a share for the company, which also sells keyboards and smartphone cases, sources said.
A $9-a-share offer represents a 60 percent premium to Zagg’s Tuesday closing price of $5.62.
Zagg is distributing sales books to suitors and expects to conclude its auction in November if all goes according to plan, sources said.
The company projects generating $60 million in 2020 earnings before taxes and depreciation and believes it is worth a seven times multiple of that, or $420 million, said a source close to the deal.
That would equate to $10.90 per share, the source said.
Zagg declined to comment.
This sale is starting weeks after Zagg cut its 2019 forecast due to a weak smartphone market, and Chinese tariffs sending its share price tumbling.
On Aug. 6, Zagg said it hired Bank of America to explore strategic alternatives and would not comment on it further until the end of the process.
Zagg has a dominant market share in iPhone screen protection and battery packs, making earnings somewhat predictable and attractive, sources said.
Acco declined comment.