Sales of iPhones may be slowing, but a bidding war is brewing for the nation’s dominant maker of smartphone screen protectors, The Post has learned.
Zagg Inc., which makes protective covers for iPhones, Android phones and other devices, has secured confidentiality agreements from two potential buyers in exchange for a look at the Midvale, Utah, company’s financials, two sources told The Post.
One of the potential bidders is Acco Brands, owner of Swingline staplers and Artline pens, sources said.
The other bidder is an undisclosed private equity firm that has sent Zagg’s board a letter saying it would pay as much as $9 a share for the company, which also sells keyboards and cellphone cases, sources said.
A $9-a-share offer represents a 60 percent premium to Zagg’s Tuesday closing price of $5.62.
Zagg shares rose 12 percent, to $6.33, after the The Post broke the news about the bidding war online.
Zagg, which announced earlier this month that it hired Bank of America to explore strategic alternatives, is distributing sales books to suitors and aims to conclude its auction in November, sources said.
The company projects generating $60 million in 2020 earnings before taxes and depreciation, and believes it is worth a seven-times multiple of that, or $420 million, said a source close to the deal. That would equate to $10.90 per share, the source said.
Zagg declined to comment.
This sale process is kicking off at a difficult time for Zagg, which cut its 2019 forecast due to weakening smartphone sales and concerns over the effect of US tariffs on its supply chain. The stock is down 32 percent this year.
One reason is the iPhone, which Zagg has said accounts for the bulk of its sales. In the first quarter of 2019, iPhone sales were down 17.6 percent from last year, according to research firm Gartner.
Zagg, which is estimated to dominate 90 percent of the US screen-protection market, also makes cellphone battery packs, cellphone cases, keyboards and other items.
The company sells its products through wireless carriers like Verizon as well as stores like Best Buy and Target.
Acco is known mostly for its office supplies, like staplers, but it also sells some tech products, including a once-popular computer-accessory line known as Kensington locks, which secure laptops to desks.
“Historically, they have been interested in technology,” an analyst said.
Zagg could also help Acco diversify its business as the number of office supply stores dwindle, the analyst said.
The company trades at 6.7 times earnings before taxes and depreciation, so paying roughly the same multiple for Zagg should be accretive when factoring in synergies, the analyst said.