The current team at Proxy will continue to run the business, while Jon Diver, Kiran Shah and Mike Hyde will join the board.
It is believed that the acquisition of this substantial interest in Proxy will enable the Character Group to extend its European reach, potentially enable frictionless access to EU markets post-Brexit, provide a more compelling marketing/distribution proposition for toy companies and brand owners seeking UK and EU market access and provide a vehicle for growth of the Group’s non-UK sales of its own-developed product ranges/resources.
Proxy, which has 27 employees, currently sources product through a strong international network of suppliers and partners, including Character Group. All product lines are sold exclusively in the Nordic region (principally Denmark, Sweden, Norway and Finland) by Proxy, with all sales to the top five customers managed in-house through its own sales force. Smaller accounts are managed through distribution partners in the markets.
The business is headed by CEO Morten Geschwendtner and CFO Mikkel Kjærsgaard, both of whom have over 25 years of experience in the toy industry and have also worked in collaboration with the Character team over several years. The current team at Proxy will continue to run the day to day business. To provide additional resource and skills to the senior team, Jon Diver, Kiran Shah and Mike Hyde (all executive directors of the company) will join the operating board of Proxy.
The purchase price comprises an initial cash consideration of DKK2.5m (approximately £300,000), with further “earn-out” consideration of up to DKK25m (approximately £3m) payable, depending on performance, in each of the years ending 31st December 2018, 2019 and 2020. The acquisition is expected to be earnings enhancing in the first full year in the enlarged Group.
Commenting on the transaction, Jon Diver, joint-managing director of Character Group, commented: “We are delighted to secure a formal working partnership with the team at Proxy. Having known and worked with them for a number of years we have recognised that there are many opportunities to enhance our current market positions.”
Jon continued: “There are many synergies that we can achieve together, including Proxy being able to take advantage of our Far East infrastructure in terms of sourcing and quality assurance and, on a domestic basis, our in-house marketing and distribution capability. Both teams are of similar mind set and together will be in a better position to grow our businesses.”
Morten Geschwendtner, chief executive officer of Proxy, added: “As a leading toy products distributor in the Nordic territories, Proxy is very excited to have Character on board as a major investor in our business. We have known the Character team for a number of years and have mutual respect for each other’s businesses. This partnership allows us to work more closely with a well-respected international toy business and opens new opportunities; we will also benefit from being able to access the wider knowledge and skills of Character as well as its sourcing, purchasing and marketing capabilities. We look forward to working with the team at Character, exchanging ideas and initiatives and growing our business further in the coming years.”
For a fuller version of the statement issue by Character Group please go to www.thecharacter.com