A-Mark Precious Metals to acquire LPM Group for upfront consideration of $41.5M

A-Mark Precious Metals has entered into a non-binding letter of intent with AMS Holding providing for three transactions, including the proposed acquisition of LPM Group Limited, one of Asia’s largest precious metals dealers. The proposed transactions are subject to the preparation and execution of definitive agreements and are expected to close simultaneously in February 2024, subject to the receipt of customary closing conditions and required third party consents or approvals, including the consent of the lenders under A-Mark’s Trading Credit Facility. Established in 2012, LPM is one of the largest precious metals wholesalers in Asia. Headquartered at the heart of Hong Kong’s Central Financial District, LPM boasts the city’s largest numismatics showroom. LPM offers a wide selection of products through its retail store and 24/7 online trading platform, including recently released silver coins, gold bullion, certified coins, and the latest collectible numismatic issues. The company’s global customer base spans sovereign and private mints, manufacturers and fabricators, investors, collectors, e-commerce customers, and other retail customers. The letter of intent provides that A-Mark will acquire 100% of the issued and outstanding equity interests of LPM Group Limited from AMS for total upfront consideration of $41.5 million, consisting of $37.5 million in cash, subject to certain closing adjustments, and $4.0 million of A-Mark common stock. The letter of intent further provides that LPM will have a tangible net worth of $11.5 million inclusive of net cash and precious metals inventories. The letter of intent also contemplates that AMS will have the potential to earn up to an additional $37.5 million in cash based on achievement of certain Earnings before Interest, Taxes, Depreciation, and Amortization targets for 2024, 2025 and 2026. Under the letter of intent, A-Mark affiliate, Pinehurst Coin Exchange, one of the nation’s largest distributors of modern certified coins of which A-Mark owns 49.0%, will acquire all the assets of ModernCoinMart from AMS for $5.5 million, subject to certain closing adjustments. MCM is one of the fastest growing dealers in the U.S. and ships to many international destinations. As part of the asset purchase, Pinehurst will acquire $3.0 million of inventory, along with MCM’s customer list, brand name, and related intellectual property. The letter of intent further provides that a proposed joint venture consisting of A-Mark, Pinehurst and Stack’s Bowers Numismatics, LLC, an affiliate of A-Mark, will acquire a common equity interest in AMS equivalent to 10% of the total, fully diluted common equity interests in AMS. As part of the proposed investment, A-Mark CEO Greg Roberts will join the AMS board of directors.