Relatively few people simply buy a smartphone or tablet. The majority of customers also buy at least one accessory and sometimes several. It is easy to see why: a smartphone is typically a valuable consumer item and definitely benefits from the additional protection afforded by a case. Conversely, a tablet can be a great device for consuming media but in order to do anything productive on it, a keyboard is a very useful accessory. Both devices are also only as useful as they have power, and these are the reasons why the mobile device accessory market is a thriving place. Yesterday, the 2 February 2016, we heard the news that two of the world's largest and most respected accessory manufacturers, mophie and ZAGG, had signed a merger. In essence, ZAGG are acquiring mophie and the new company will overnight move to become the market leader in battery cases, external batteries, screen protection and tablet keyboards.
Currently, mophie are the world's number one battery case manufacturer around the world and a leading manufacturer of portable battery chargers (the largest in North America). Their original claim to fame is the juice pack case for the Apple iPhone, but since then the company have released similar cases for a number of other devices, including a popular line for the Galaxy S series. ZAGG are a leading manufacturer in a number of protective and keyboard accessories for smartphones and tablets, such as the InvisibleShield and iFrogz brands. These are well known and respected names in the accessory market. Both mophie and ZAGG's products are available to buy from a large number of carrier stores across the world, plus their respective websites.
Under the terms of the transaction, ZAGG has agreed to buy mophie for $100 Million plus an amount based on how successful the business is over the twelve month "earn-out" period from April 2016. During this earn out period, both senior management teams will work together to identify areas where the combined business can share best practices from both companies. The companies explained that their combined sales for 2015 amounted to $470 Million. The new combined group are planning to continue their manufacturing process in China and merge their distribution networks across North America, Europe and the Asia regions. From the notes accompanying the merger, it appears that the new group are planning on joining their design and development teams in some way, shape or form. The new company should also benefit from improved brand recognition, which can be used to raise awareness of the ZAGG and mophie products: the group are intent on becoming the "preferred brand" in their particular markets.
Speaking of the merger, ZAGG's President and Chief Executive Officer said that the "strategic combination of two industry innovators with complementary products, brands and distribution platforms will enable us to deliver increased value for our customers and shareholders. We see numerous opportunities to drive revenue growth and increase profitability by leveraging the strengths of both organizations to strengthen product development, improve brand presence, and expand distribution." Daniel Huang, the Chief Executive Officer at mophie, added that "ZAGG and mophie represent two companies with strong brands and shared values. The rationale for the merger is powerful and the combination enhances each company's growth strategy while offering a truly compelling value proposition. Together, we intend to build on our market leadership to deliver great products, advance the brand strength, and increase our global presence in mobile accessories."