LONDON 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 aerial 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 Technology magazine at the trade show and is now listed on the IMT website. 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 products to be sold through Vitec’s global sales and distributor network. Teradek will operate as an autonomous business unit within Vitec’s Videocom division.”
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 business has 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 issued share 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.
