and IRVINE, CALIF.
The Vitec Group plc has agreed to
acquire Teradek, LLC, a maker of
wireless video transmission technology, for up to $30.4 million. The deal is expected
to close “imminently,” according to Vitec.
Teradek, which is based in Irvine, makes a variety of camera-mounted wireless
video transmitters for live streaming to online platforms and for
point-to-point ENG applications, with real-time monitoring, recording and
visual capture. All the products are designed and
manufactured in the United States and are sold internationally. (The Teradek Bond cellular-bonding transmitter is shown at left.)
Vitec noted that “there is a growing demand for wirelessly
transmitted images,” and indeed, the company’s wireless
businesses, Integrated Microwave Technologies and Nucomm, introduced a
prototype wireless video transmission device at NAB 2013 in conjunction with
Dejero. The Dejero + Nucomm Connect Live (below, right) combined
IMT’s COFDM technology and Dejero’s
(patent-pending at the time) adaptive bitrate cellular bonding and portal
management system. The D+N Connect Live won a STAR Award from TV
magazine at the trade show and is now listed on the IMT
. It was also named as a finalist for the IABM Design & Innovation Award to be announced at the upcoming IBC show.
Vitec said the Teradek acquisition will
strengthen its existing portfolio of broadcast
microwave systems and that “there is significant scope for Teradek’s
to be sold through Vitec’s global sales and distributor network.
will operate as an autonomous business unit within Vitec’s Videocom
For the financial year ending Dec. 31, 2012, Teradek had sales of
*$10.4 million (£6.7 million) and generated an unaudited adjusted
profit before tax of $1.6 million (£1 million). Vitec said the
grown year to date and “we anticipate further
profitable growth going forward.” As at Dec. 31, 2012, Teradek had
adjusted gross assets of $2.9 million (£1.9 million).
Under the terms of the acquisition, the initial estimated
consideration is $14.9 million (£9.6 million). This comprises
$11.5 million to be paid in cash on completion; $2 million of
Vitec ordinary shares to be held in escrow for two years
post-completion; and $1.4 million to be paid to certain key
employees in cash over a two-year period after completion. The cash
consideration is subject to post-completion adjustments for changes in
working capital. Teradek will be acquired on a debt/cash free basis.
To satisfy the $2 million in escrow shares, Vitec will issue 214,847 ordinary
shares in the capital of the company conditionally upon admission by the U.K
Listing Authority for trading on the London Stock Exchange. It is
expected that admission will be effective on Sept. 3, 2013. The shares will be
issued as fully paid
and will rank pari passu
in all respects with the existing
capital of the company.
Up to a further $15.5 million (£9.9 million) is payable dependent on
the future profitability of Teradek. This will reflect performance
against annual earnings before interet and tax targets over the three-year
period to Dec. 31,
2015. The maximum payment would be achieved if Teradek delivers these
targets, including an EBIT of $9 million in 2015.
Of the deferred
consideration, 10 percent will be payable to certain key employees in cash. The
remaining 90 percent will be payable to the sellers.
Up to a third of any
deferred consideration paid to the sellers may be satisfied by issuing
new Vitec ordinary shares, depending on the level of performance, with
the remainder paid in cash. The recipients of these shares are required
to hold them for a certain period under the terms of this acquisition.
The business is being acquired from its current Management who will
remain with the business.
The cash consideration will be financed out of Vitec’s existing
finance facilities. The Board expects the acquisition to be immediately
earnings enhancing. Vitec had 2012 revenues of £345.3 million
* The U.S. values quoted in this announcement are also shown at an exchange
rate of £1 = $1.56.