TECHNICOLOR : TECHNICOLOR TO ACQUIRE CISCO CONNECTED DEVICES DIVISION
(Thomson Reuters ONE) -
TECHNICOLOR TO ACQUIRE CISCO CONNECTED DEVICES DIVISION FOR ?550m IN STOCK AND
CASH
Combination creates global leader in CPE;
Strategic partnership around next generation video, broadband and IoT
PARIS (France), July 23, 2015 -- Technicolor (Euronext Paris: TCH; OTCQX: TCLRY)
has entered into an exclusive agreement with Cisco (NASDAQ: CSCO) to acquire its
customer premises equipment (CPE) business for ?550 million[1] (or $600 million
equivalent) in a cash and stock transaction, reviewed by the Boards of Directors
of the two companies, which will be on a cash free, debt free basis. The
acquisition should result in Technicolor's Connected Home segment reaching
adjusted EBITDA in excess of ?200 million by year end 2016 and best-in-class
profitability (i.e.8-9% adjusted EBITDA margin) by 2017. The transaction will
also translate into double-digit EPS accretion at Group level starting in the
first full year after closing.
Under the terms of the agreement, upon the closing of the transaction, Cisco
will receive approximately ?413 million ($450 million) in cash and approximately
?137 million ($150 million) in newly issued Technicolor shares, subject to
certain adjustments provided for in the agreement.
The transaction and addition of Cisco's complementary product portfolio will
make Technicolor one of the global leaders in CPE and will immediately increase
the company's industrial and technological scale in all major geographies:
* c.15%[2] market share worldwide;
* c.60 million devices shipped each year and a global presence with an
installed base of c. 290 million set-top-boxes and c.185 million gateways in
over 100 countries;
* c.?3bn of pro-forma revenues in 2014, doubling Technicolor's revenues in the
Connected Home segment;
* Synergies generation in excess of ?100 million per annum on a run-rate
basis, in particular in the field of supply chain and SG&A;
* Strengthened innovation capabilities with over ?250 million of combined
annual spending in Research and Innovation.
Simultaneously to the acquisition, Technicolor and Cisco will enter into a
strategic partnership that will allow both companies to develop and deliver next
generation video and broadband technologies, with cooperation on Internet of
Things (IoT) solutions and services. The strategic agreement will provide
ongoing commitment to all existing customers and expand offerings. By combining
their strengths and leading video expertise, from content creation to in-home
delivery, the two companies will accelerate innovation and forge a leading
entity that network service providers can rely on for their next generation
connected home experiences. Technicolor and Cisco also have signed a long-term
patent cross-licensing agreement that covers specific intellectual property and
patents from both companies. As part of the strategic agreement and after the
transaction has closed, Mr. Hilton Romanski, Senior Vice President and Chief
Strategy Officer of Cisco, will join Technicolor's Board of Directors.
"We know that video expertise is essential to the future of creating outstanding
network and home infrastructure products and services," said Frederic Rose, CEO
of Technicolor. "Through this acquisition and strategic agreement, Technicolor
can immediately bring its unrivalled experience and innovation in video
creation, delivery, and display to more customers in more geographies, while
strengthening our position as a technology leader."
"The strategic relevance of video to every consumer, business, city and country
around the world is only growing, and the market is moving rapidly," said John
Chambers, Chairman and CEO of Cisco. "This is the right time and we have the
right company in Technicolor to drive the future of the CPE business to deliver
what our customers and partners need, today and into the future. At Cisco, we
are prioritizing our investments to deliver on our strategy of video in the
cloud, and will partner with Technicolor to position the CPE business and
employees for future success."
The ?413 million cash portion of the consideration will be financed through
cash-on-hand and fully-underwritten new debt with an anticipated limited impact
on Technicolor's leverage position. Reference Technicolor share price used for
calculation of number of new shares issued will be the volume-weighted average
price over a period of 7 days prior to announcement and 7 days post
announcement. Newly issued shares to Cisco will be subject to an 18-month lock-
up period on 5% of the corresponding ownership in Technicolor, with the
remainder of the shares being subject to a 12-month lock-up period post-closing.
The transaction is expected to close by the end of the fourth quarter of 2015 or
during the first quarter of 2016, subject to regulatory approvals and customary
closing conditions. Technicolor will release pro forma IFRS financial statements
and update its Drive 2020 financial objectives upon closing of the transaction.
# # #
About Technicolor
Technicolor, a worldwide technology leader in the media and entertainment
sector, is at the forefront of digital innovation. Our world class research and
innovation laboratories enable us to lead the market in delivering advanced
video services to content creators and distributors. We also benefit from an
extensive intellectual property portfolio focused on imaging and sound
technologies, based on a thriving licensing business. Our commitment: supporting
the delivery of exciting new experiences for consumers in theatres, homes and
on-the-go. For more information on Technicolor, please go to www.technicolor.com
About Cisco
Cisco (NASDAQ: CSCO) is the worldwide leader in IT that helps companies seize
the opportunities of tomorrow by proving that amazing things can happen when you
connect the previously unconnected. For ongoing news, please go
to http://thenetwork.cisco.com.
Media Contacts:
+----------------------------------+-------------------------------+
| Technicolor: | Cisco: |
| Sandra Carvalho: +1 323 208 2624 | Andrea Duffy: +1 212 714 4152 |
| sandra.carvalho(at)technicolor.com | anduffy(at)cisco.com |
| Emilie Megel: +33 1 41 86 61 48 | |
| emilie.megel(at)technicolor.com | |
| | |
+----------------------------------+-------------------------------+
Investor Relations Contacts:
+----------------------------------+---------------------------------+
| Technicolor: | Cisco: |
| Emilie Megel: +33 1 41 86 61 48 | Carol Villazon: +1 408 527 6538 |
| emilie.megel(at)technicolor.com | carolv(at)cisco.com |
| Laurent Sfaxi: +33 1 41 86 58 83 | |
| laurent.sfaxi(at)technicolor.com | |
| | |
+----------------------------------+---------------------------------+
--------------------------------------------------------------------------------
[1] The conversion to euros was done using the euro foreign exchange reference
rate of 1.0902 as at 22 July 2015 as published on the European Central Bank
website
[2] Sources: Del'Oro, Infonetics, Cisco and Technicolor estimates
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Source: TECHNICOLOR via GlobeNewswire
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