EL SEGUNDO, Calif. - A-Mark Precious Metals, Inc. (NASDAQ: NASDAQ:AMRK), a prominent precious metals platform, has announced its intent to acquire LPM Group Limited, a major precious metals dealer in Asia, in a strategic move to expand its international footprint. The acquisition is part of a trio of transactions with AMS Holding, LLC, outlined in a non-binding letter of intent, which also includes asset purchases and a strategic investment.
The proposed acquisition of LPM, headquartered in Hong Kong, is valued at $41.5 million, combining $37.5 million in cash and $4.0 million in A-Mark common stock. The agreement additionally offers AMS the opportunity to earn up to $37.5 million in cash based on LPM's EBITDA performance from 2024 to 2026. LPM's financial highlights over the past three years include net sales averaging $393.2 million, with significant volumes of gold and silver sold to a diverse global customer base.
A-Mark's CEO, Greg Roberts, emphasized the growth potential for LPM, citing the ability to secure larger orders and offer a broader product range with A-Mark's resources. The acquisition is expected to enhance A-Mark's e-commerce expertise and direct-to-consumer business expansion in Asia.
In addition to the LPM deal, A-Mark's affiliate Pinehurst Coin Exchange will acquire assets from ModernCoinMart (MCM) for $5.5 million, including inventory and intellectual property. Pinehurst CEO Vince Wade expressed confidence in MCM's e-commerce presence and product appeal.
Furthermore, a joint venture involving A-Mark, Pinehurst, and Stack's Bowers Numismatics will acquire a 10% equity interest in AMS, with A-Mark CEO Greg Roberts joining the AMS board. AMS CEO Jim Hilt welcomed the partnership, highlighting the strategic transformation and growth acceleration it represents for the collecting industry.
The transactions are subject to customary closing conditions and the execution of definitive agreements, with an expected simultaneous close in February 2024. A-Mark will discuss these transactions and its fiscal second quarter 2024 financial results in a conference call today.
A-Mark, founded in 1965, operates across wholesale, direct-to-consumer, and secured lending segments, serving a broad range of customers from sovereign mints to individual collectors. This expansion aligns with A-Mark's strategy to leverage its integrated platform and enhance its global presence, particularly in the Asian market.
This article is based on a press release statement.
InvestingPro Insights
In light of A-Mark Precious Metals' recent announcement to acquire LPM Group Limited and expand its global reach, a glance at the firm's financial health and market performance provides valuable context. According to InvestingPro data, A-Mark boasts a market capitalization of $618.8 million and is trading at an attractive earnings multiple with a P/E Ratio of 4.83. This is further underscored by a P/E Ratio (adjusted) for the last twelve months as of Q1 2024 at 4.75, suggesting a potentially undervalued stock in comparison to earnings.
Revenue growth is equally impressive, with a 22.69% increase over the last twelve months as of Q1 2024, and a quarterly surge of 30.75% in Q1 2024. However, it's worth noting that the company's gross profit margin stands at 2.71%, which InvestingPro Tips highlight as a weak point, indicating that despite robust revenue growth, profitability at the gross level could be stronger.
For shareholders, A-Mark's significant dividend yield of 6.75% is a boon, especially considering the substantial 80% dividend growth in the last twelve months as of Q1 2024. This, coupled with the company's long-term profitability and high return over the last decade, provides a compelling case for investor interest. Nevertheless, potential investors should be aware of the two analysts who have revised their earnings downwards for the upcoming period, as noted in InvestingPro Tips. Additionally, the company's stock has taken a significant hit over the last six months, with a price total return of -28.27%.
For those considering a deeper dive into A-Mark Precious Metals' financials and future prospects, InvestingPro offers more tips and a fair value estimate of $31.95, suggesting room for growth from its previous close price of $27.2. Interested readers can access a wealth of further analysis and insights at https://www.investing.com/pro/AMRK. Moreover, using the coupon code SFY24 provides an additional 10% off a 2-year InvestingPro+ subscription, while SFY241 offers the same discount for a 1-year subscription, granting access to a total of 13 InvestingPro Tips for AMRK, which can guide investment decisions with greater precision.
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