Article Overview

Technicolor Receives a Binding Offer From Francisco Partners for Grass Valley Broadcast Business

Francisco Partners is a San Francisco, California-based private equity firm focused on investments in technology-based companies

Further to discussions started in May, Technicolor has received a fully documented binding offer from Francisco Partners for the acquisition of the Grass Valley Broadcast business. This disposal process contributes to the strategic refocus around its content creators and network service providers customer base, initiated by the Group in 2009.

As announced early 2010, the Grass Valley perimeter has been reorganized in three distinct activities: broadcast, transmission and head-end, and is undergoing a social restructuring launched end of March 2010. The Broadcast activity provides professional equipment and related services to broadcasters and teleproduction companies. With 1,457 employees (as of 30 June 2010) operating in 23 countries, this activity recorded revenues of about 272 million Euros in 2009 and an operating loss of about 52 million Euros, and consumed about 49 million Euros of cash (excluding changes in working capital). In 2009, the Broadcast activity accounted for 72% of the total Grass Valley perimeter revenues and 59% of the operating loss.

Key Elements of the Offer

• The scope of the offer includes all assets and employees of the Grass Valley Broadcast business. It also includes the transfer of patents and a license agreement related to the professional broadcast equipment field of use. Retirement liabilities related to the active employees included in the perimeter of the sale will be transferred to the buyer.
• The offer values the Broadcast business at 100 million US Dollars.
• Based on the book value of the assets, the Group expects to register a loss for this disposal in his 2010 financial statements.
• Given the structure of the offer, Technicolor will not receive cash proceeds from this disposal which can be applied to the company's Disposal Proceeds Notes.


The offer made by Francisco Partners comprises the following

• A 80 million US Dollars promissory note issued to Technicolor with a six-year maturity and bearing a capitalized interest of 5% per year. The amount of the note represents the value of the business minus the present value of retirement liabilities transferred.
• The transfer by Technicolor of a net amount of 20 millions Euros of cash required for the ongoing management of the activity.
• The right for Technicolor to receive additional consideration from the buyer based on the potential future remuneration of the new owners of the disposed entity.

The transaction is expected to close before the end of 2010, subject to the relevant customary regulatory administrative approvals and consultations.

"This binding offer is a key step in the largest of the disposals we decided to make as part of the strategic refocus of our activity portfolio. This will clarify and solidify our financial profile. This is also positive news for Grass Valley Broadcast employees and customers who will benefit from the engagement of a new shareholder recognized as a leader in technology-based businesses." said Stephane Rougeot, Chief Financial Officer of Technicolor.

“We are excited about this opportunity, as Grass Valley’s market leadership is clearly evident,” said David Golob, Partner at Francisco Partners. “The business has an unrivalled brand identity and company heritage, a long history of innovation, team members that are dedicated to their customers' success, and an impressive product portfolio. 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.”

“This is positive news for the company and our customers,” said Jeff Rosica, Senior Vice President and head of the Grass Valley Broadcast & Professional business. “We are encouraged that we are taking a major step towards completing the divestiture process with this binding offer from Francisco Partners. 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 benefitted our customers throughout the years. Our customers worldwide will continue to receive the high quality and service that they have come to expect from Grass Valley, with continued focus on raising the bar in our industry.”

The Transmission and Headend businesses, which are in the process of being separated from the Grass Valley Broadcast & Professional business, are not included in the offer received. Technicolor will continue the planned divestiture of these businesses separately. These businesses plan to operate individually going forward.

About Technicolor

With more than 95 years of experience in entertainment innovation, Technicolor serves an international base of entertainment, software, and gaming customers. The company is a leading provider of production, postproduction, and distribution services to content creators and distributors. Technicolor is one of the world's largest film processors; one of the largest independent manufacturers and distributors of DVDs (including Blu-ray Disc); and a leading global supplier of set-top boxes and gateways. The company also operates an Intellectual Property and Licensing business.


About Francisco Partners

Francisco Partners is a private equity firm focusing on structured investments in the information technology sector.Founded in 1999, the firm is headquartered in in San Francisco and maintains an office in London. Since inception, the firm has raised approximately $5.0 billion in committed capital across two funds and has built an investment portfolio including over 40 companies.
Founders: Benjamin Ball, Dipanjan Deb, Neil Garfinkel, Sanford R. "Sandy" Robertson, David Stanton
Key People: Keith Geeslin, David Golob, Ezra Perlman
Employees: 30 investment professionals

About Grass Valley

With a rich history serving the broadcast and professional video industries, the Grass Valley name is synonymous with innovation, leadership, and performance. With a full range of products and services supporting many of the world's most high-profile television events, Grass Valley offers the most comprehensive portfolio of flexible and cost-effective digital technologies and systems available. Customers deploying Grass Valley solutions include most of the world's leading broadcast and teleproduction facilities, independent video professionals, as well as emerging content creators and distributors providing broadband, telecommunications, and transmission services. When you’re watching news, sports, or entertainment programming, whether on a TV, the Web, or a mobile phone, you’re watching Grass Valley at work.


Grass Valley