Firm Seeks to Buy Leo’s Stereo Chain

An Encino management firm with one employee said it has signed an agreement to buy for $30 million the Leo’s Stereo chain of 43 consumer electronics stores mostly in Southern California.

But the announcement by Discovery Associates apparently took some of Leo’s top executives by surprise. On Friday afternoon, Leo’s chief financial officer, Harvey Seiff, and Leo David, the chain’s chairman and chief executive, angrily called the announcement “totally premature and unauthorized,” adding that the deal is incomplete. Later in the day, however, they issued a simple “no comment,” saying it was on the advice of their attorneys.

Discovery said that it had signed an agreement for an “immediate execution of a definitive stock purchase agreement” and that the sale is expected to be completed by the end of August.

Stephen Berglas, president of Discovery and its sole employee, called it “an agreement to enter into an agreement” to buy the Carson-based chain, which sells primarily home stereos, car stereo systems and videocassette recorders. Berglas said the confusion may have been because the agreement was negotiated through Simon David, who co-owns the privately held company with his brother, Leo.

Berglas said the agreement calls for Leo’s to operate as a wholly owned subsidiary of Discovery Associates, adding that the chain’s headquarters will remain in Carson. He said Discovery Associates is negotiating to pay for the purchase through loans from various sources, which he wouldn’t identify. He said there are no plans now to change operations at any of the stores.

Leo’s had $93 million in revenue and was profitable last year, Berglas said.