Focusrite - Strategic acquisition using cash resources
Focusrite has announced the €18.0m strategic acquisition of ADAM Audio, a leading German developer and global distributor of professional studio monitor loudspeakers, funded entirely from existing cash resources. Although continuing to operate as an autonomous subsidiary, we see clear opportunities to cross-sell to Focusrite’s global customer base of amateur and professional music markers and to leverage its distribution network. We increase our forecast FY20e PBT by 5% to £13.3m and raise our DCF-based valuation to 530p per share (previously 471p).Focusrite is engaged in the development, manufacture and marketing of professional audio and electronic music products. As of Aug 31 2017, Co. had three business segments: Focusrite, which includes the sales of Focusrite or Focusrite Pro branded products; Novation, which includes the sales of Novation or Ampify branded products; and Distribution, which distributes third-party brands including KRK, Ableton, Stanton, Cerwin-Vega, Cakewalk and sE Electronics.
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