Avid Inks Deal to Acquire Orad
In a deal that is sure to make waves throughout the broadcast technology sector, Avid has signed a definitive agreement to acquire Orad Hi-Tec Systems. Avid will buy the Israel-based provider of 3D real-time graphics, video servers, and related asset management solutions for €5.67 per share in an all-cash transaction.
The acquisition is part of Avid’s stated growth strategy and adds key content creation and media management solutions to the company’s Avid MediaCentral Platform and its “Avid Everywhere” vision. Avid expects the transaction to be accretive on an Adjusted EBITDA and cash flow basis, and will be financed by a new $100 million senior subordinated credit facility.
“We have followed Orad’s success in the market for many years and are excited about the prospects of what our combined companies can accomplish,” says Louis Hernandez, Jr, Chairman, President, and CEO of Avid. “Our industry is in a period of significant transition, in which our customers are demanding a single platform to connect creation with collaboration, asset protection, distribution and monetization. We believe this transaction further differentiates Avid as the partner with the most comprehensive solution, and accelerates our momentum as we enable our customers to operate more efficiently and profitably.”
Avid expects that the combined company will further Avid’s position as a comprehensive provider of content creation to distribution workflows for broadcast and media customers around the world. Avid also says the addition of Orad’s products to the Avid platform will further enhance the value of the platform to Avid customers. Joining the larger Avid organization opens opportunities for Orad to gain operating efficiencies and to make the innovation investments most important to Orad customers.
“Avid has a long-standing heritage of industry leadership, and it’s clear that both Avid and Orad have a common commitment to innovation and customer success,” says Avi Sharir, CEO and President of Orad. “Our solutions are highly complementary to the Avid product suite, and together we believe we can create the most comprehensive solution for the media industry. Further, Avid’s global scale and distribution network provide significant opportunities for customer support, growth and market expansion. We are confident that joining the Avid family will create more powerful opportunities for our customers, partners, and employees.”
Under the terms of the definitive agreement, Avid has agreed to pay €5.67 in cash for each share of Orad common stock which, at today’s exchange rate equals approximately $60 million USD, net of estimated cash acquired.
“We believe this valuation represents an approximate 6x multiple of EBITDA, net of estimated cost synergies leveraging our platform thus generating attractive economics for us and a richer more efficient experience for our customers,” says John Frederick, Avid’s EVP, Chief Administrative and Financial Officer.
The transaction is subject to customary closing conditions, including approval by 75% of Orad’s shareholders and closing is expected to take place in June 2015. Avid has entered into voting agreements with holders of a majority of Orad’s outstanding shares of capital stock, pursuant to which they agree to vote in favor of the transaction. Avid intends to fund the purchase price with a $100 million secured term loan for which it has received a financing commitment.