Simms buys KH Distribution

Simms buys KH Distribution

Component and accessories distributor, Simms International, has bought Queensland-based Apple distributor, KH Distribution, for an undisclosed sum. The combined company will have 50 staff across NSW, Victoria and Queensland with an annual turnover of $80 million.

Simms managing director, Danny Moore, said it started investigating potential acquisitions via a broker late last year. The pair came up with a shortlist of 15 targets, which did not include KH.

"It's a larger deal than we expected. We had a range in terms of revenue and staff we were targeting to ensure we did this in a measured way," he said.

"KH has more staff than we intended and its head office is outside of NSW, which makes this a bigger and more complicated deal. But the similarities in culture were obvious.

"We wanted a focused organisation, as we are heavily focused on Kingston. About 90 per cent of the KH business is Apple."

One of the major criteria driving Simms' acquisitions strategy was to amplify its retail presence.

"Kingston launched its digital media products into the retail sector about 15 months ago. Going into retail with a narrow product set didn't give us anywhere near the success we expected," Moore said.

"We wanted a company that could plug the retail role, which KH does nicely. We will also look to roll the products we acquire into the corporate channel. As Apple has been very aggressive with its Intel CPU push, the timing has been perfect."

On the flip side, KH's Apple-centric reseller base was a major opportunity for growth, Moore said. Simms' vendor portfolio includes STM, Sony, SanDisk and FujiFilm.

"There is a little overlap in customers, but this is going to add a large number into our database," he said.

KH owner and director, Keith Rice, said he had not been planning to sell. The company recorded massive growth in the past two years, largely driven by the success of iPod, with revenues leaping 60 per cent year-on-year.

"We have been struggling with this [growth] in a lot of ways - most importantly in working capital," he said. "We were approached out of the blue by Simms' brokers. After our initial chats with Danny, it was clear there were synergies between the two organisations and Simms could provide the means to continue growth."

Rice and his wife, Aine, founded KH as Apple's Queensland-based distributor 10 years ago. Since then, the company has acquired Apple distributors in NSW and Victoria. Rice previously worked for AppleCentre dealerships in Darwin and Bundaberg.

Both Keith and Aine will continue to work with Simms over the next six months as the companies are integrated.

"I'd like to say I will gracefully retire, but the reality will be different," Rice said. "I'm not sure what the future holds."

Simms has no plans to buy more companies this year but Moore did not rule out further acquisitions.

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