Alliance Entertainment Acquires Alliance Game Distributors

In a significant development for the tabletop gaming and collectibles industry, Alliance Entertainment Holdings has emerged as the winning bidder for Alliance Game Distributors, a key player in North American tabletop game distribution. This acquisition occurred as part of the bankruptcy auction for Diamond Comics, the former owner of Alliance Game Distributors.

The Bankruptcy and Acquisition:

Diamond Comics, facing substantial financial difficulties and owing tens of millions to creditors, filed for bankruptcy protection in January. Alliance Entertainment, a Nasdaq-listed distributor of music, movies, toys, and consumer electronics, successfully acquired the majority of Diamond’s assets, including Alliance Game Distributors.

Initially, Universal Distribution, a Canadian competitor, placed a $39 million “stalking horse” bid to set a minimum price for the auction. While the exact financial details of Alliance Entertainment’s winning bid remain undisclosed, it was required to exceed the Universal bid, plus a 3% break-up fee, Universal’s expenses (capped at 0.5% of the sale price), and an additional $500,000.

Beyond Alliance Game Distributors, Alliance Entertainment will also take over Diamond’s US comic distribution business, Diamond Select Toys & Collectibles, and Collectible Grading Authority.

Financial Implications and Creditors:

Diamond’s creditors include major industry players such as Penguin Random House, owed over $9.2 million, and The Pokemon Company. In the tabletop gaming sector, National Entertainment Collectibles (WizKids’ parent company) is owed over $2.6 million, Hasbro over $1 million, Wizards of the Coast over $914,000, and Publisher Services Inc (PSi) about $223,000.

Further complicating matters, Renegade Game Studios was revealed to be a guarantor on $41 million of debtor-in-possession financing from JP Morgan Chase, arranged by Diamond. This arrangement, prompted by Diamond founder Steve Geppi’s ownership stake in Renegade, is expected to conclude upon the repayment of the loan after the acquisition, anticipated on April 10th.

Alliance Game Distributors’ Legacy and Market Position:

Alliance Game Distributors, formed in 1998 through the merger of Chessex and The Armory, has been a dominant force in US board game distribution. Acquired by Diamond Comics in 2000, it has maintained its strong market position despite Diamond’s recent challenges.

The company boasts a catalog of approximately 15,000 unique products, serving over 3,000 independent hobby retailers across North America. In contrast, Alliance Entertainment distributes over 325,000 unique products to more than 35,000 retail storefronts across 72 countries, with a current market capitalization exceeding $220 million.

Strategic Expansion and Future Outlook:

Alliance Entertainment’s CEO, Jeff Walker, emphasized the “transformative opportunity” this acquisition presents, highlighting the potential to expand their leadership in gaming and collectibles. He noted the complementary nature of the acquired businesses, with their “legacy of exclusive titles, deep retail relationships, and strong presence in comics, tabletop games, and collectible merchandise.”

Walker also pointed to the “powerful cross-selling potential” between their product lines and customer bases, aiming to expand their product portfolio’s reach across both mass retail and specialty channels.

Bruce Ogilvie, Executive Chairman of Alliance Entertainment, expressed enthusiasm for collaborating with suppliers, creators, and publishing partners, and reaffirmed their commitment to delivering “excellent service and reliability” to customers.

This acquisition marks a significant shift in the distribution landscape, with Alliance Entertainment poised to leverage the strengths of Alliance Game Distributors to further solidify its position in the gaming and collectibles market.