KOCH ENTERTAINMENT ACQUIRES NAVARRE’S MUSIC DISTRIBUTION BUSINESS
PORT WASHINGTON, NEW YORK - May 14, 2007 - KOCH Entertainment, the U.S. subsidiary of Entertainment One Ltd. (the “Company”) which has recently been listed on the London Stock Exchange’s AIM market, today announced that it has entered into a conditional agreement to acquire Navarre Entertainment Media Inc. Navarre Entertainment Media is a distributor of independent music labels in the United States. The total consideration for the acquisition is $6.5 million, to be funded by existing cash resources within the Company, and the assumption of certain liabilities. Navarre Entertainment Media generated over $50 million in net revenues during its last fiscal year which ended on March 31, 2007. The Company believes that the acquisition represents a unique opportunity to leverage the existing KOCH infrastructure and generate significant cost synergies alongside consolidating its position as the leading independent music distributor in North America.
KOCH Entertainment, founded twenty years ago in 1987, has revolutionized independent music distribution in America by becoming the first company to exclusively distribute domestic independents throughout the U.S. in 1991. While KOCH has continued to set the pace, many other companies have followed, but few have survived. After the sale of Ryko to Warner, KOCH and Navarre have remained as the only two true independent music distribution companies of scale. With the addition of Navarre’s $50 million in annual net revenue, KOCH Entertainment’s market share will receive a boost from its present 1.8% to approximately 2.7%. Navarre’s strong label roster of country and rock labels will complement KOCH’s label roster and further enhance KOCH’s leadership position as America’s leading independent music company.
Commenting on the purchase of Navarre’s music distribution business, Michael Koch, KOCH Entertainment Founder and CEO, stated, “I am pleased that Eric and Cary have decided to entrust their music distribution company to us. I have long admired Eric’s entrepreneurial spirit and success in building Navarre into the powerhouse it is today. After twenty years of steady organic growth we are now making a significant acquisition that will further enhance our leadership position in independent music distribution. We are now the only true independent distributor with scale. Needless to say, we at KOCH continue to believe in the future of music and music retail.”
Eric Paulson, Navarre’s Chairman, said that the KOCH Navarre Entertainment Media fit was needed. “With all aspects of the music industry consolidating, the independent distribution segment needs to acquire critical mass. Competing for shelf space at retail for the independent label and artist needs to be done from a position of strength. I have long admired what Michael and his team have built and their level of commitment to the music industry. This is a natural fit for both our labels and the customers”.
Cary Deacon, Navarre's CEO, commented, “The sale of Navarre Entertainment Media is a continuation of our strategy to assess all parts of the company that are in business sectors that are in decline to allow us to redeploy assets in stable and growth businesses. We realized that consolidation was inevitable in the Independent music sector in order to serve both, labels and their artists, and the retail customers. We are proud of the accomplishments of our associates in Navarre Entertainment Media group. We believe KOCH Entertainment is a perfect fit for all of our constituents going forward.”
About KOCH Entertainment
KOCH Entertainment is the leading and fastest-growing independent music company in the U.S. and its operations encompass record and video labels as well as physical and digital distribution companies in the U.S. and Canada. KOCH Entertainment is the market leader among independents in both the U.S. and Canada and its record label KOCH Records had the largest number of Billboard-charting albums among independents for the last six years in a row (2001 – 2006). KOCH Entertainment is owned by Entertainment One Ltd. which has recently been listed on the London Stock Exchange’s AIM market (ticker symbol “ETO”). For more information, please visit the Company’s website at www.kochent.com.
About Navarre Corporation
Navarre Corporation is a publisher and distributor of physical and digital home entertainment and multimedia products, including PC software, CD audio, DVD video, video games and accessories. Since its founding in 1983, the Company has established distribution relationships with customers across a wide spectrum of retail channels which includes mass merchants, discount, wholesale club, office and music superstores, military and e-tailers nationwide. The Company currently provides its products to over 19,000 retail and distribution center locations throughout the United States and Canada. Navarre has expanded its business to include the licensing and publishing of home entertainment and multimedia content, primarily through the acquisitions of Encore, BCI, and FUNimation. For more information, please visit the Company's web site at www.navarre.com.
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