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Rowe International Announces Plans To Sell Vending, Money Changer Businesses

Posted On: 10/25/2002

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GRAND RAPIDS, MI - Rowe International has announced plans to divest its vending, changer and bill validator businesses as the initial phase of a strategic refocus on opportunities in the entertainment market.

According to Rowe chairman and chief executive officer J. Douglas Johnson, the company will close its Texas distribution business, Rowe Dallas, in conjunction with the sale of the vending manufacturing unit.

Johnson added that Rowe will continue to manufacture its complete line of changers, and provide parts and support for the 60,000-plus pieces in the field during the divestiture process.

"We are pleased with our progress in the divestiture of these business areas, and look forward to continuing Rowe's transformation into a domestic and international music and games entertainment business," Johnson said. "These divestitures are the first steps in implementing the company's long-term strategic direction."

Although Rowe was a pioneer in vending machine manufacture from the pre-war years through the full-line revolution of the 1950s and '60s, vending has not been a major part of the company's business in recent years, Johnson pointed out. "And, while the company's changer business is strong and highly profitable, it is not compatible with Rowe's new strategic initiatives." From a manufacturing perspective, the vending and music businesses are not complementary, he added; in fact, it was not until 1995 that they were brought together under the same roof at Rowe AMI's Grand Rapids plant. Prior to that, they always had been separate.

The jukebox component of Rowe dates back to 1909, when Automatic Musical Instruments was established as a manufacturer of player pianos. The vending element was created in 1926, when inventor William Rowe developed a practical and successful cigarette vending machine. The two manufacturing businesses wound up under the ownership of Automatic Canteen Co., which merged them in the 1950s, then spun the new Rowe entity off early in the next decade.

Rowe International played a leading role in the full-line vending revolution, building a loyal following for its innovative food machines that contributes to the success of the "748 Showcase Merchandiser" today. The other venders in the present line, three glassfront snack merchandiser models, likewise have inherited a tradition that includes one of the most successful and durable "first-in, first-out" candy/snack venders to precede the glassfront revolution more than three decades ago.

The company's "BC" and "Century" changer lines represent a strong and profitable business with a worldwide clientele, Johnson added. Banknote validation is another technology in which Rowe played a groundbreaking role.

While this solid industry reputation should enhance the value of the Rowe vending business to a buyer, Johnson emphasized that Rowe's management considers the present company's best future prospect to be the licensed music and amusement arena. Thus, Rowe will focus on the development and marketing of Internet-enabled digital downloading and conventional CD jukeboxes, networked game terminals with tournament capability, and branded entertainment content.

"The proceeds of these divestitures will be applied to growing Rowe's entertainment business and retiring the company's senior debt," Johnson explained. The company's success in the jukebox business is illustrated by its share of market, estimated at 65% domestically and 55% worldwide.

Rowe's new focus on entertainment also will allow it to devote resources to the development of new business opportunities beyond the traditional coin machine location. "Rowe realizes that there is very large market demand for innovative entertainment products in public venues," Johnson reported. "Locations in this market, which include restaurant and hotel chains, have not been penetrated by interactive amusements, and Rowe will provide the hardware and the content."

Rowe's entertainment system line presently includes the digital "NetStar" and "StarLink" downloading jukeboxes and "GemStar" countertop touchscreen video games, all of which implement interactive music and entertainment software from Ecast in the United States market using a variety of broadband Internet services. Outside the U.S., Rowe markets its own digital music platform and networking technology for the Internet jukeboxes.

Rowe's public entertainment line also includes the "Proteus" skill game terminal, featuring a PC-based game engine for which Rowe has licensed and developed branded content. Initial titles include "Who Wants to be a Millionaire?" (ABC), "Two Minute Drill" (ESPN) and "Weakest Link" (NBC); tournament and redemption capabilities are provided.

The company's self-contained jukebox line recently was updated as the new "StarGlo CD-100K" took the field. The "StarGlo" blazes a new trail in several ways, including the exclusive use of high-brightness LEDs for all jukebox lighting, the provision of a 1,000W. audio amplifier as standard equipment, and the "My Song First" option that allows a selection to be moved to the head of the queue by paying a premium.

Rowe maintains a sales office in London, and has one of the industry's most extensive sales and support networks, with distributors in more than 40 countries.