Artist & Entertainment Group Limited (ASX:AEM) announces that it has signed an memorandum of understanding to acquire Rajon Distribution Pty Limited comprising businesses of Rajon Music, Rajon Vision, Rajon New Zealand and BIG Records (collectively “The Rajon Group”).
The Rajon Group is expected to achieve earnings before interest and tax exceeding $1m on revenues exceeding $20m for the financial year ending 30 June 2006. After the completion of the acquisition of Rajon and the Destra Digital Media assets, AEM will represent a fully integrated model for products and services relating to music and video. AEM will continue the expansion of its talent management and rights business which it achieved growth in excess of 80% each of the past year, and further aggressively expand its media and digital media services businesses via acquisition and investment.
Ben Macpherson, CEO of Artist & Entertainment Group stated that “The acquisition of Rajon is an exciting development for AEM, representing the strength of our combined efforts with Destra to build an integrated digital media and media services company that generates significant earnings. Rajon has a long and solid track record of profitability and has grown significantly in the past two years despite the general music industry trend because of its unique and leading position within the market. The company is well run and on a stand alone basis makes a lot of sense. However, once we include the expected positive impact over time of integration into our group, we will see further improvements to Rajon’s growth. We expect this transaction should be very pleasing for AEM shareholders”.
Alex Hartman, Director of Strategy of Artist & Entertainment Group stated “The acquisition of Rajon is significantly EPS accretive for AEM Shareholders and delivers us both an underlying financial strength and strategic value for the group. AEM will fuse its existing talent management and rights business with Rajon’s proven skill in packaging/distributing music/video and Destra’s digital media capabilities, online and mobile, to deliver significant earnings growth for shareholders. There is an exciting array of synergies between the existing AEM business, Destra Media and the Rajon business in terms of both earnings potential and reduced operating costs. Such synergies include the potential for the proven management of Rajon to fully exploit AEM’s extensive Fable music catalogue with over 15,000 classic songs. We will also pursue mobile content, ring-tone and digital download opportunities for Rajon through Destra Mobile, Destra Music and MP3.com.au. AEM’s strategy is now to expand this model from music and video across other media and media services segments”.
The directors of AEM believe that the financial outlook for 2006 is substantially strengthened by Rajon’s track record of strong earnings.
For more information, please download the PDF document below.