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"The Koch acquisition will enhance our position as one of the leading suppliers of home entertainment in Canada and the U.S. market."
—ROW President/CEO Darren Throop
ROW ABOOT TO BUY KOCH
Canadian wholesaler expands into U.S.
According to the Candian Press, ROW Entertainment Income Fund is buying the U.S.-based Koch independent music company for about $80 million US.

Toronto-based ROW said late Monday it had entered into a definitive agreement to buy Koch, one of the largest independent music and video distributors in North America. ROW said it's buying the business from Michael Koch, its founder and CEO, and certain affiliates for $80 million in cash and fund units, which includes assumption of about $5.1 million in liabilities.

In payment, ROW will issue 2.4 million units at $10.54 each for $20 million and $54.9 million in cash.

ROW said the combined businesses would have had revenues of $675 million Cdn last year.

The closing of the Koch acquisition is scheduled for June 1, subject to various conditions and regulatory approvals.

Koch's operations encompass a music publishing business and a distribution business, similar to ROW. The U.S. company produces and sells under its own private labels a variety of music. Koch also has a 75 per cent stake in DRG Records Inc., an independent theatre music label.

ROW said the acquisition will provide the Toronto company with a platform for the U.S. market for home entertainment and provide increased opportunities within the growing DVD sector.

"The titles from Koch's music publishing business will be available for distribution both in Canada and in the U.S. by our various business units," said Darren Throop, president and CEO of the fund. "In addition, the Koch acquisition will enhance our position as one of the leading suppliers of home entertainment in Canada and the U.S. market."

Under the deal, Michael Koch will work for the merged company for three years and Koch's management team will also remain following the acquisition.

The cash portion of the purchase price, together with associated transactions costs, will be financed through an increase in ROW's bank debt with Scotiabank, while about $70 million Cdn will come from a firm deal financing of seven million subscription receipts at $10 each.

ROW Entertainment (TSX:ROW.UN) is the largest wholesaler in Canada of CDs and DVDs and the largest specialty retailer of CDs and DVDs in secondary markets in Canada.

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