Harmonic said it has completed the acquisition of rival compression vendor Thomson Video Networks (TVN), nearly a month earlier than the April 1, 2016 date predicted in the company’s Q4 and full-year 2015 announcement.
This indicates that conditions of the deal were met ahead of schedule.
In a filing with securities regulators, Harmonic said the completion of the “transaction will be subject to TVN’s reacquisition of its patent portfolio from France Brevets (a third-party patent licensing firm), the receipt of certain historical audited financial statements of TVN prepared in accordance with U.S. generally accepted accounting principles, the receipt of certain regulatory approvals required under French law, and certain other customary closing conditions.”
The Harmonic-TVN deal was structured as a “put option” for TVN’s shareholders. A put option gives the holder the right but not the obligation to sell shares to the option writer (in this instance Harmonic). The “put” option is subject to the selling TVN shareholders’ 60-day consultation process with TVN’s employee works council in France. When/if TVN’s shareholders execute the “put” option subsequent to the consultation process, then the parties would immediately execute a formal purchase and sale agreement.
According to filings with securities regulators, “On February 11, 2016, pursuant to the terms of the Put Option Agreement,” a Harmonic company “entered into a securities purchase agreement (SPA) relating to the purchase of 100% of the share capital and voting rights of Thomson Video Networks.”
The terms of the deal include an initial purchase price of $75,000,000, “subject to customary working capital and other closing adjustments as set forth in the SPA, payable at closing of the transaction. In addition, there may be additional post-closing payments in amounts respectively capped to (i) the difference between €76,000,000 (as converted from euros into U.S. dollars) and $75,000,000, with respect to an adjustment based on TVN’s 2015 revenue, and (ii) $5,000,000, with respect to an adjustment based on TVN’s 2015 backlog that ships during the first half of 2016, all of which at such times and under the circumstances set forth in the SPA.
TVN has changed ownership several times in the past five years. TVN was divested by Technicolor in 2011 in a management-led buyout sponsored by Fonds de Consolidation & Développement des Entreprises (FDCE) for a reported price of around $8 million. When Technicolor announced that it had sold TVN to FDCE in 2009, it said that the company had 525 employees and operated in 15 countries, and that its 2009 revenues was €61m.
Institutional investor Edmon de Rothschild Investment Partners then acquired a 49% stake in TVN in December 2014.
“We are pleased to announce the closing of the TVN acquisition,” said Patrick Harshman, President and CEO of Harmonic. “By bringing together two powerhouses in the video industry, we further extend our position as the market leader. With expanded global R&D, sales and support teams, we are accelerating innovation and driving delivery of best-in-class solutions, products, capabilities and support services for our customers.”
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