Wholesaler Super D has acquired Infinity Resources, which should add about $80 million to the company’s yearly revenue, and make the company the second largest U.S. one-stop.
Infinity Resources owns the Collector's Choice record label, the deepdiscount.com online CD and DVD store; Heartland Music, the mail order house; Serenade Music, the mail order house specializing in African-American themed music; and Hepcat, the indie distributor specializing in roots music.
The acquisition should boost Super D’s revenue to $200 million a year. Super D will assume the company's liabilities, which includes about $11 million in accounts payables.
In order to finance the acquisition, PNC bank has expanded Super D's asset-based revolving credit facility to about $20 million and provided the wholesaler with a two-year, $4.8 million term loan.
"The acquisition strengthens our direct-to-consumer business; it opens the door to the studios so we can buy DVD direct; it gives us another distribution point; it grows our indie-distribution business SDID [Super D Indie Distribution]; its gets us into manufacturing-on-demand; and it expands our capabilities by adding, 3PL, third-party logistics," says Super D CEO Bruce Ogilvie.
About half of Infinity's business, $40 million, is through selling CD and DVD through online stores. In addition to deepdiscount, Infinity Resources also operates DVD Planet. The deal also strengthens Super D's direct-to-consumer business by adding catalog mail order houses, which generate about $25 million to $30 million a year for Infinity. In addition to Collector's Choice and Heartland, Infinity Resources also has Critics' Choice Video, and the Video Collection, with all catalog operations also operating as online stores too.
In Ottawa, Ill., "Infinity has a call center with 90 employees taking calls 24 hours a day, seven days a week," Ogilvie reports. "They deal with the white glove customers who don't go online to buy" music and DVDs.
The deal also builds Super D's distribution and fulfillment capability. Infinity Resources operates 129,000 square-foot state-of-the-art distribution facility in Itasca, Illinois while Super D has its own 68,250 square-foot warehouse in Irvine Calif.
As it is, Super D currently stocks 340,411 unique music and video titles of which 120,000 are U.S. CD titles, 70,000 U.S. DVD titles and over 150,000 non-parallel import titles from 32 countries.
The Hepcat indie distribution business has about $9 million in annual revenue which doubles Super D Indie Distribution business to about $18 million annually.
While Super D currently offers fulfillment services to online stores, the Infinity deal takes it deeper into 3PL by adding call center services and web-hosting capabilities. Also, Infinity Resources has a relationship with Allied Vaughn, which does manufacturing-on-demand in Infinity's Itasca warehouse for video label and has just begun providing that to audio labels. Infinity supplies the fulfillment services, also known as 3PL or third-party logistics, to the consumers.
“Now, the real work begins,” Ogilvie says. “We have to figure out how to put our operations together and choose the ‘best practices’ between both locations and rationalize the two locations and properly downsize where it make sense. If there is overlap in jobs some of those jobs will have to be eliminated."