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Francisco Partners agrees to buy Grass Valley business

After literally years of searching, and a few close-but-failed negotiations with others, Technicolor has found a buyer for its Grass Valley Broadcast and Professional business. San Francisco-based Francisco Partners has made an offer to purchase the assets and technology now sold under the Grass Valley brand. This includes a variety of video production and distribution equipment that is used by a large numbers of stations and playout facilities around the world.

According to a prepared statement, Francisco Partners has agreed to pay Technicolor $80 million (via a promissory note with a six-year maturity and bearing a capitalized interest of 5 percent per year) for the Grass Valley business. The company statement said the amount of the note represents the value of Grass Valley minus the present value of retirement liabilities transferred. The deal has other provisions as well.

Jeff Rosica, senior vice president and head of Grass Valley, who helped orchestrate the sale, says the binding offer is, "positive news for the company and our customers. It feels great."

Rosica said because it took so long to sell the company — Grass Valley was publicly on the market since early-2009, due to a historic economic downturn and other issues — equipment sales were affected because some customers weren’t sure whether their equipment would be supported. Some even held off buying Grass Valley products during the period.

“The process taking so long is never easy on employees and customers,” Rosica said, adding that they’ve had a lot of discussion with customers to reassure them that Grass Valley has a future. “Thanks to a very loyal customer base, the impending sale has not affected our business that much. People know our products and how they help get the job done.”

“For a long time now people have been asking me ‘what’s happening [with the sale negotiations]?’ It’s great to finally be able to openly tell them we have achieved a milestone that we envisioned quite some time ago.”

Rosica said there will be no immediate changes in the Grass Valley management team he heads up and the business will be operated as an independent entity. “We’re all here and plan to move Grass Valley forward.”

Technicolor's Transmission and Headend businesses were not part of the agreement and are now in the process of being separated from the Grass Valley Broadcast & Professional business. Technicolor said it would sell these units that make set-top boxes, separately.

Historically a video switcher company, Grass Valley has grown to become one of the major suppliers of broadcast and video production equipment to the broadcast industry.

In order to make the company more financially attractive, Technicolor has been shedding employees and products for the past year. Technicolor said by the end of the year it will have cut 25 percent of Grass Valley's workforce, or about 625 jobs worldwide. In March the company also reorganized Grass Valley into three distinct segments: broadcast, headends and transmission.

The binding offer from Francisco Partners, which is expected to be finalized by the end of 2010, is for 100 percent ownership of the current Grass Valley Broadcast & Professional business, which would continue to operate as “Grass Valley” going forward. This includes the camera, content repurposing, editing, master control, modular, news production, production automation, routing, servers, storage and switching product lines, including its entire product portfolios, the R&D centers and factories around the world, the sales and systems activities and customer support organization worldwide, as well as the management and administrative support functions dedicated to the business.