Tweeter to Acquire DOW Stereo/Video

Last week, Tweeter Home Entertainment Group, Inc. announced that the company has reached an agreement in principle to acquire DOW Stereo/Video, Inc., located in San Diego, California. DOW is a nine-store specialty consumer-electronics retailer with sales of approximately $38 million, and has been in business in the San Diego market for over 30 years. The transaction is expected to be completed on or about July 1, 1999. Tweeter says it will pay approximately $5.5 million for the company excluding acquisition costs, and has the option of paying approximately $500,000 of the purchase price in Tweeter common stock.

Jeffrey Stone, Tweeter's president and COO, said, "The DOW acquisition is another important step in Tweeter's growth. Industry leaders recognize DOW as a top specialty consumer-electronics retailer and a major player in the introduction of new consumer-electronics technologies to the American public. Building on DOW's base of nine stores and retail sales of approximately $38 million, Tweeter expects to aggressively grow DOW's presence in the San Diego and southern California markets over the next several years. We feel that DOW is currently under-stored in southern California, and we intend to add stores and enhance their market position by moving their product selection to a more upscale mix in accordance with our company's overall strategy."

The DOW Stereo transaction will constitute the second acquisition for Tweeter in 1999; the company bought a seven-store chain, Home Entertainment, Inc. of Texas, on February 1. Tweeter was founded in Canton, Massachusetts in 1972, and currently operates 62 stores under these banners: Tweeter in New England, Bryn Mawr in the Mid-Atlantic market, HiFi Buys in the Southeast, and Home Entertainment in Texas. The company's 1998 revenues were $232.3 million.

Stone added that "We also expect to open up to 24 new stores between now and the end of fiscal 2000, and relocate seven existing stores, most of the relocations from the mid-Atlantic marketplace. This will allow us even greater leverage in those markets where we already have a solid presence. With the addition of the nine DOW stores, we will cut our new-store plan for fiscal 1999 to seven stores from the previously announced 11 stores."