Shares of Salt Lake City-based Zagg Inc., which sells protective film coverings to keep electronic devices scratch-and-dent free, rose 18.5 percent Wednesday, a day after the company announced it made its first acquisition as a public company.
Zagg purchased Logan-based iFrogz Inc. for $105 million in a transaction that consisted of $50 million in cash, 4.4 million restricted shares of Zagg's common stock and the assumption of $5 million of iFrogz debt.
"They fit perfectly with Zagg," said Robert Pedersen II, Zagg's president and CEO. "Their products are highly complementary to our own. And that will allow us to immediately broaden our product line and drive the growth of our retail footprint."
The Logan company produces protective cases, headphones and earbuds for smartphones, electronic tablets and other mobile devices. It generated $40.9 million in revenue last year, with sales this year projected to top $60 million.
Scott Huskinson, iFrogz's president, said the acquisition was an "amazing" opportunity for the company he co-founded with partner Clay Broadbent.
"They are strong [in product areas] where we are weak," Huskinson said. "And they are weak in areas where we are strong. The opportunity for us to combine and take advantage of scale is of major league importance to our future."
One securities analyst who follows Zagg, Mike Malouf of Craig-Hallum Capital Group Inc., said in a research note that he anticipates the acquisition will add 7 cents per share to the company's earnings in 2011 and 16 cents in 2012.
"iFrogz has strong relationships with existing Zagg retailers such as Best Buy and AT&T. However they bring Wal-Mart to the mix where Zagg has no exposure. Zagg on the other hand, can bring relationships with Verizon, Sprint and Carphone Warehouse to the table as potential retailers for iFrogz's products," he wrote.
For its first quarter ended March 31, Zagg reported revenue of $27 million, a 207 percent increase over the same quarter of the previous year. Net income was $3.3 million, or 13 cents per share, a 312 percent increase.
Pedersen said going forward, iFrogz will operate as a wholly-owned subsidiary of Zagg and continue to be based in Logan with its workforce of 45 remaining in place. "They [iFrogz] already are extremely profitable, so there is no need to make any big changes."
He said Huskinson will continue to lead iFrogz.
Pedersen said he first met iFrogz's founders in the fall of 2006 while attending a trade show in New York. "We realized both companies were from Utah and had dinner together. We decided we should stay in touch, and we did."