Deborah D. McAdams /
UPDATED: PE Firm Makes $100 Million Binding Offer for Grass Valley
NEVADA CITY, CALIF.:
A San Francisco private-equity firm has made a $100 million binding offer for
Technicolor’s Grass Valley business. Francisco Partners made the offer to take
Grass Valley from Technicolor--formerly Thomson, which put the division up for
sale 18 months ago.
The transaction includes all assets of Grass Valley Broadcast &
Professional, which will operate as “Grass Valley” going forward. The transmission
and headend businesses are not included in the deal. Technicolor said it will
continue the previously planned divestiture of those units separately.
The transaction involves an $80 million promissory note issued to Technicolor,
with a six-year maturity bearing 5 percent interest. The amount represents the
value of the business less the present value of transferred retirement
liabilities. Technicolor in turn will contribute €20 million (US$25.9 million)
cash for ongoing operations, and maintain the right to receive “additional
consideration” based on a potential future sale.
The broadcast business had 1,457 employees operating in 23 countries as of June
30, 2010, Technicolor said. It recorded revenues in 2009 of €272 million
(US$352 million), an operating loss of €52 million (US$67.3 million), and
consumed around €49 million ($63.4 million). (Exchange rates current.) The broadcast unit accounted for
72 percent of the total revenues of the entire Grass division--including
headend and transmission--and accounted for 59 percent of the operating loss.
Francisco Partners has around $5 billion invested in various technology
companies and ventures. Most are hardware and systems, software, service and
semiconductor related. Transaction values are said to range from “$30 million
to $2 billion.”
The Grass Valley purchase puts Francisco squarely into professional broadcast
equipment. Grass product lines include cameras, content repurposing, editing,
master control, modules, news production, automation, routing, servers,
storage, and switching product lines. The deal also includes Grass Valley’s
research-and-development centers and factories; sales and systems activities,
customer support, management and administration operations.
“We are looking forward to the opportunity to work closely with Grass Valley’s
management to create a company that leverages the strong entrepreneurial spirit
within Grass Valley, allowing them to achieve even greater success,” said David
Golob, partner at Francisco Partners.
Jeff Rosica, senior vice president and head of Grass Valley Broadcast &
Professional said, “The opportunity to be part of Francisco Partner’s portfolio
gives Grass Valley a solid foundation to continue to work tirelessly to
maintain our core values of innovation, performance, and passion that have
benefited our customers throughout the years.”
Grass Valley was established 50 years ago in the eponymous Sierra Nevada
community by Dr. Donald Hare. The company’s Marauder-shifted video switchers
came to define the industry standard. Grass, known locally as “The Group,”
would become the largest employer in Nevada County, with a workforce exceeding
1,200 at one time.
Grass was merged with Tektronix in 1974. Tek
for $46 million and a 10 percent stake in 1999, to private San Diego, Calif.,
investor, Terry Gooding. Thomson SA purchased the company in 2002 for $172
million. As the company changed hands, its brain trust dispersed and spawned
new start-ups in the area. Consequently, Nevada County is home to Nvision,
Telestream, Editware, Sierra Video Systems, Ensemble Designs, AJA Video, ISIS
and the old Graham-Patten Systems.
Grass Valley--the business--was most recently put up for sale in February of
2009 when Paris-based Thomson announced it would likely breach its loan
covenants. Thomson subsequently underwent restructuring, emerging at
Technicolor earlier this year. Having failed to attract a buyer for Grass
Valley as of March, Technicolor announced in April it would cut one-fourth of
the work force--625 jobs worldwide.
Around 300 employees still work at the Nevada City campus, with a few more
expected to be relocated from Florida, according to
The transaction is expected to close by the end of 2010 subject to final
agreement, regulatory approval, applicable notification requirements and, when
requested, prior consultation of staff representatives.
-- Deborah D. McAdams