BURNABY, BC, Nov. 27, 2012 /CNW/ - GLENTEL Inc. (TSX: GLN) announced today the signing of a binding agreement through its wholly-owned United States of America subsidiary GLENTEL (USA), Inc. to purchase 100% of the ownership of Automotive Technologies, Inc. ("ATI") dba Wireless Zone®, a 428-store franchise system in theUnited States that sells Verizon Wireless products and services.
Wireless Zone is one of six exclusive Verizon Wireless National Premium Retailers and is headquartered in Middletown, Connecticut. Founded in 1988 by Russell Weldon and Michael Geer as "The Car Phone Store®," now operating as Wireless Zone, the company has become one of the largest and most respected Verizon Wireless Premium Retailers. GLENTEL owns and operates Diamond Wireless, which is also a Verizon Wireless National Premium Retailer in the United States.
"GLENTEL recently acquired the AMT Group/Allphones in Australia and now we are delighted to welcome Wireless Zone in the United States to our company," stated Thomas Skidmore, GLENTEL's President and Chief Executive Officer. "Wireless Zone has consistently delivered strong growth in sales and profitability. Wireless Zone complements our Diamond Wireless stores with very little store overlap. This acquisition provides us with good concentration of stores in the eastern U.S. states, where more than 65% of the population is situated, and will allow us to accelerate our growth nationally representing Verizon Wireless. The addition of ATI/Wireless Zone brings the total number of locations operated by GLENTEL in Canada, Australia, and the United States to more than 1,180."
Kevin Sinclair has agreed to continue with the company as ATI/Wireless Zone's Managing Director. He has managed the strategic and profitable growth of Wireless Zone for over 18 years. Kevin Sinclair and his senior management team have entered into employment agreements and, for certain consideration, ATI will issue them share equivalent rights which include put and call provisions for an aggregate total of 4.2% of ATI's distributed operating profits.
"We are excited to join a company that shares the same values of quality, service, philanthropy and integrity," statedKevin Sinclair, ATI/Wireless Zone's Managing Director. "With our joint commitment to the Wireless Zone team members, franchise owners, and retail customers, we are confident that Wireless Zone will help foster and accelerate GLENTEL's growth in the United States. With the backing of a solid public company, we can build our franchise system into a stronger network of retail locations while growing the Wireless Zone brand nationwide."
Wireless Zone has a long-term exclusive agency agreement with Verizon Wireless, operating 409 franchised and 19 corporate stores in 28 States, with 273 stores in the Northeast (Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont and Virginia), 115 stores in the Midwest (Illinois, Indiana, Iowa, Kansas, Kentucky, Pennsylvania, Michigan, Minnesota, Missouri, Ohio, Oklahoma, and West Virginia), and 40 stores in the Southeast (Florida, Georgia, Louisiana, and Texas). Wireless Zone has a focus on growth based on its national contract with Verizon Wireless. Wireless Zone operates as a franchisor registered in all 50 states in the U.S., offering GLENTEL the opportunity to grow Wireless Zone beyond its current base of 28 U.S. states. Diamond Wireless currently operates in 17 states with over 210 corporately owned retail mall-based stores, primarily in the western and southeast regions of theUnited States and will continue its retail mall expansion plan into the eastern United States.
Transaction Summary
The transaction is expected to close in the next two to four weeks, and is subject to the fulfillment of certain customary conditions. The total purchase price for 100% stock and other consideration is USD $83.3 million, subject to closing adjustments. The purchase price will be funded by GLENTEL's cash, short-term investments, and committed bank debt. Canaccord Genuity acted as exclusive financial advisor to Automotive Technologies Inc. (Wireless Zone).