On December 14, it was announced in Paris that Thomson Multimedia, a provider and integrator of digital broadcasting systems, announced an agreement to acquire Grass Valley Group (GVG), a private equity digital media company based in California, for an estimated us$ 172 million, payable in cash once the acquisition by the regulators is approved and completed.
Marc Valentin, vice president of Thomson, explained that the transaction is part of a strategy aimed at covering in an integrated way each of the steps of the digital content creation business.
"Early last year, when we bought Philips' broadcasting division, Valentin said, we said that acquisition was part of a broader strategy that sought to have a closer relationship with media content creators on the video network. This acquisition of the Grass Valley Group is a second step in our strategy that not only extends it but also means having a better relationship with customers around the world in the context of networking solutions. I want to tell you that this represents a second step in the sense that it brings us a new and excellent product portfolio that will extend our solutions to a combined offering that will include switchers, routers, products and special servers on which Grass Valley Group has built a reputation in recent years. It also creates a powerful global networking house."
Valentin also stressed that the transition to the world of digital broadcasting has been happening for several years. "What is happening today is that for the introduction of digital technologies we can benefit not only by transferring video to a data format but also by building networks between people working within the broadcasting world."
The purchase of GVG fits within Thomson's Digital Media Solutions (DMS) strategy, a market segment focused on business solutions for content providers, broadcasters and network operators. Earlier this year, Thomson acquired Philips' Professional Broadcast group within the same strategy.
Where does GVG come from?
Grass Valley Group has been an independent company for just five years after splitting from Tektronix. "In recent years, as an independent company, we have applied business growth strategies and gained a position with the brand we have for four or five years, says Thorsteinson, president and CEO of GVG. We have invested heavily in research and development for our new streaming products, we have worked to provide solutions to our customers and improve their capital efficiency, since one of the priorities of broadcasters today is to be more efficient in their operations to continue moving forward, and we have reached a leading position in the product lines we offer. Finally, one of the objectives we had was to take advantage of our experience in broadcasting to venture into new fields such as Internet streaming and digital cinematography. Those have been our goals in the last two or three years that we've been a private equity firm, and overall we've been successful in achieving our goals."
As a $200 million a year company with private capital, Grass Valley Group had reached a point where it needed to do something to keep growing. "We had two alternatives Remember Thorsteinson, one was to do an IPO and everyone knows that the market is not good for IPOs, so we quickly concluded that it was not the optimal solution. and the second option was to be acquired by a larger organization that had complementary strengths and allowed us to continue growing."
According to the GVG executive, Thomson Multimedia met all the characteristics of complementarity of products and geographical coverage to advance a negotiation. "From our perspective, the possibility of being part of a global company focused on digital media is very stimulating, Thorsteinson continues. We have spoken to many of our customers and while we expected the reaction to be positive, it has exceeded our expectations by being extremely positive about the possibilities of this combination of companies to offer solutions. Customers who need to transition to digital require a strong partner as we are now."
The fact of having carried out this operation from a relatively strong position in the market, allowed Grass Valley Group to take advantage of its great acceptance and not rush to decide what to do in the next two, three or five years.
The new company
According to a joint statement from both companies, it is stated that the new company will be able to offer end-to-end solutions for the video value chain, with greater geographical coverage and new opportunities in the field of broadband.
The communiqué highlights in particular three key aspects:
1. Thomson's product offering will be expanded by an excellent portfolio of infrastructure products, including switchers, routers, storage network systems, video servers and digital news production solutions.
2. Increased geographic coverage and expanded customer base for Thomson products and solutions, particularly for the acquisition and capture businesses (cameras and digital film).
3. Enhanced broadband product offering to help professionals make a complete transition to digital, including optimizing asset management by leveraging GVG's expertise in video, storage, and networking compression technologies.
Companies
GVG's sales amounted to approximately US$ 200 million during 2000 in areas such as equipment for digital broadcasting and internet video streaming. With these products, Thomson plans to expand its portfolio of solutions for content providers.
"Becoming part of a global company's portfolio is one of the best things that could happen to Grass Valley Group's customers and the company itself, said Tim Thorsteinson, president and CEO of GVG. This means dispatching new products without interruption, accelerating research and development processes, and achieving tremendous reach in distribution and service."
Thomson Multimedia is a company of 73,000 employees, with a presence in 30 countries and sales of US$ 8.3 billion. Thomson's portfolio includes a wide range of video technologies, systems and consumer products and for professionals in the entertainment and media industry. To enable the transition from media to digital, Thomson has five main activities: Digital Media Solutions, Components and Displays, Consumer Products, Patents and Licensing, and New Media Services. The company distributes its products under the Thomson, RCA and Technicolor brands.
