Broadcast Vendor M&A: Vitec Buys Teradeck for $15 Million

Posted by Joe Zaller
Aug 29 2013

Vitec announced that it has agreed to acquire bonded cellular technology provider Teradek for an initial payment of $15m, and up to an additional $15m based on Teradek’s future profitability.

Teradek is being acquired from its current management who will remain with the business, and will operate the company as an autonomous business unit within Vitec’s Videocom division.

Teradek had 2012 sales of sales of $10.4m and generated an unaudited adjusted profit before tax of $1.6m. Vitec says Teradeck experienced strong growth during 2013 year to date that further profitable growth is anticipated.

Under the terms of the deal, Vitec initially will pay $14.9m, comprised of $11.5m in cash, $2m worth of Vitec ordinary shares to be held in escrow for two years post-completion, and $1.4m that will be paid to certain key employees in cash over a two-year period after completion.

Vitec will pay up to a further $15.5m dependent on the future profitability of Teradek. This will reflect performance against annual EBIT targets over the three-year period to 31 December 2015. The maximum payment would be achieved if Teradek delivers these targets including an EBIT of $9 in 2015. Of the deferred consideration, 10% will be payable to certain key employees in cash. The remaining 90% 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.

There is a growing demand for the supply of wirelessly transmitted images and Teradek is a world leader in the provision of this technology,” said Vitec CEO Stephen Bird. “We believe that we can continue to grow this business and generate a good return on this investment.”

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