- Purchase of stock worth £2.4 million
- Second purchase in as many months
- Compelling consolidation opportunity
The UK’s largest online retailer of musical instruments Gear4music (G4M:AIM) struck a cord with investors on Thursday (12 June) after announcing the purchase of stock from a competitor in administration.
The shares jumped more than 8% to 163p in early trading, taking gains over the last year to 25% as the York-headquartered company continues its recovery after a string of supply chain disruption issues.
ANOTHER ONE BITES THE DUST
Gear4music announced the purchase of stock with an estimated cost of £2.4 million alongside certain intangible assets including websites, trademarks and commercial data, for a total consideration of up to £1.2 million.
The assets are being purchased from Administrators of Jamm Co 2019 and its subsidiaries, including S&T Audio, which was the UK’s fourth largest retailer of musical instruments and music equipment, according to Music Trades.
The business, which traded as PMT Play Music Today, was an omni-channel musical instrument retailer with a reported annual turnover of £43 million in its financial year to 30 April 2024.
For comparison, Gear4music is expected to report revenue of £147 million for the year to 31 March, according to consensus estimates provided by Refinitiv.
Gear4music said it was not acquiring any part of the PMT’s trading business nor any liabilities and has no plans to use the PMT name.
ON A ROLL
It is the second time in a few months the company has snapped up stock from a struggling competitor, following the purchase of assets from the administrators of GAK, the company behind GAK.co.uk and The Guitar, Amp & Keyboard Centre on 16 April.
GAK is one of two price discounters in Europe which have gone under in 2025, as Netherlands-based online rival BAX lurched into insolvency on 2 April.
As Shares pointed out recently, the disappearance of competitors should be a net positive for Gear4music, providing it a compelling market consolidation opportunity.