Universal Distribution completes Alliance Game Distributors buyout from Diamond Comics after chaotic bankruptcy auction
Canadian board game, TCG and comics distribution major Universal Distribution has completed its takeover of US peer Alliance Game Distributors, following a tumultuous bankruptcy auction of the latter’s former owner Diamond Comics.
Universal agreed to pay a base total of more than $49.6m for Alliance, with the ultimate price tag to be adjusted to account for Alliance’s inventory, accounts receivable and payable, and the average net working capital of the business at the close of the deal.
Angelo Exarhakos, president and CEO of Universal Distribution, said, “We are thrilled to officially welcome Alliance into the Universal Distribution family. This acquisition marks a transformative step forward in our mission to deliver exceptional service and value to retailers and publishers across North America.
“By combining Alliance’s respected legacy and expansive network with Universal’s operational strengths and innovation-driven approach, we are poised to elevate the distribution experience across the industry.
“We look forward to building on the trusted relationships Alliance has cultivated and continuing to support the growth and vibrancy of the hobby gaming community.”
The deal follows a rollercoasting bankruptcy auction for the assets of Diamond, which, despite having built an almost monopolistic position in comic book distribution across close to 40 years, filed for bankruptcy protection in January owing tens of millions of dollars to a long list of creditors.
That process initially looked to have been settled on March 25, when Nasdaq-listed Alliance Entertainment (AENT) – a major distributor of music, movies, toys and consumer electronics – became the winning bidder for the vast majority of Diamond’s assets – including AGD.
AENT’s $72.2m offer beat a rival joint bid from Universal Distribution and WizKids owner Ad Populum, who had offered $69.1m – but less than two weeks later the deal was plunged into turmoil when it emerged Diamond was attempting to sideline AENT in favour of selling to the second-placed bidders.
AENT sued Diamond for acting in bad faith and conducting the auction “in a manner that was unfair to any party other than their preferred purchaser”, and three days cancelled the lawsuit after its bid was approved by the bankruptcy court.
The total purchase price then grew to more than $85m amid a rise in Diamond’s financial obligations during the auction process, with its accounts payable – its short-term debt and liabilities – having increased by about $16m between January and mid-April.
By April 25 the deal was off again, with AENT terminating the process and Diamond releasing a statement to say it had “pivoted to alternative, exceptionally well-known purchasers who are excited to partner with us” – widely understood to be Diamond and Ad Populum.
AENT then sued Diamond for a second time, claiming it had fraudulently misrepresented AGD’s relationship with Wizards of the Coast – the company’s biggest vendor, accounting for about 25% of its $161m annual revenue.
The lawsuit claims Diamond had attempted to cover up that WotC had confirmed last December that it would not renew its distribution agreement beyond the end of 2024, aside from a 90-day extension to aid with the bankruptcy proceedings.
AENT has claimed that it had subsequently attempted to continue with its purchase at a $19m discount, which it said represented the loss of WotC’s business, but said Diamond “refused to engage in those discussions”.
The lawsuit says AENT was defrauded of millions of dollars in fees and expenses it had racked up as part of its bidding process, and claims Diamond has refused to return its $8.5m deposit, providing “no reasonable justification for doing so”.
Alliance Game Distributors has been a heavyweight of US board game distribution since it was created through the merger of Chessex and The Armory in 1998, with both companies already major players in the sector before the deal was signed.
The company had maintained its strong position since being bought by Diamond in 2000, despite the woes of its parent company in recent years.
AGD says it stocks about 15,000 unique products, which it provides to more than 3,000 independent hobby retailers across North America.
BoardGameWire has reached out to senior executives at Universal Distribution for more details of the deal and their plans for the future of Alliance, and will update this story if we receive a response.
