BREAKING NEWS
On Wednesday, ProSource CEO Jim Pearse notified members of one of the industry’s largest dealer buying groups that Premium Audio Company – a subsidiary of Voxx International Corporation that oversees its audio brands Onkyo, Integra, and Klipsch – is being dropped from its assortment. This is big news and comes at a difficult time for Voxx which is in deep due diligence for its acquisition by Gentex Corp.
See more on ProSource dropping Premium Audio Company
ProSource CEO Jim Pearse circulated a communication to ProSource members, a copy of which was shown to Strata-gee by a source, in which he notified them that the group was ending its relationship with Premium Audio Company (PAC), “[a]fter thorough consideration.” In this note to members, Pearse offered no explanation for why the group chose to drop the company from its list of vendors.
However, it is clear that this was not a knee-jerk reaction, but a thoughtful choice made after significant consideration. In the note, Pearse says, “We understand that this is a significant change to our trusted assortment. Please feel free to reach out directly if you have any questions.”
A Long History Comes to an End
Pearse’s note acknowledges the long history between ProSource and PAC, “Premium Audio Company has been a steadfast supporter of ProSource for over 35 years and has become an integral part of our family,” Pearse said. The ProSource CEO even adds this sentiment to his note,” We wish them all the best and continued success.”
This is significant news considering the fact that ProSource is widely considered to be one of PAC’s largest customers…if not the largest customer.
This development couldn’t come at a worse time for PAC and its parent company Voxx which is in the final stages of consummating an acquisition by Gentex Corp. In late January, Voxx notified the SEC that its normally required regulatory filings would be delayed, telling the Commission, “…the Company has determined that it is necessary to test its goodwill, other intangible assets, and other long-lived assets for impairment.”
Suddenly, Voxx is ‘Testing’ Its Value
Testing “goodwill, other intangible assets, and other long-lived assets” is a process to determine the proper value of these items, which are often a significant contributor to the value of the entire company.
This notice by Voxx caught my eye as unusual considering the fact that it was coming after the parties had already agreed to merge…and had already agreed to a price for that merger to happen. Of course, every company has its standard procedures if that’s what this last Voxx filing was, but it struck me as possible that some unforeseen event had been thrust on them, forcing a reconsideration of the value of the company.
Something like losing one of a subsidiary’s largest customers, for example. We don’t know if that is the case and this is just speculation on my part. But it does seem to fit the timing and sequence of these events.
ProSource Reaches Out to Members; Offers Webinar
In the meantime, sensitive to the impact of this decision on its members, ProSource is holding a members webinar to discuss this and associated matters. What associated matters? The group says it has worked with other suppliers of products similar to those supplied by PAC to make sure its members are not unduly impacted by this decision.
To facilitate this transition, we have collaborated with our ProSource vendors to develop programs that will support our membership. I am grateful for the support from Masimo, Harman, Yamaha, Sony, and Lenbrook in creating initiatives to drive increased business and profitability. I am confident that this transition will yield positive outcomes for ProSource and our members.
Jim Pearse, ProSource CEO in a note to members
An Emerging Story
This is still an emerging story with perhaps more shoes to drop. I am still seeking some more information on this issue and will provide further updates, if applicable.
You can see more on ProSource by visiting prosourceinfo.com.
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