Cinedigm Corp. has agreed to acquire Gaiam, Inc.’s entertainment unit, known as “GVE,” a leading distributor of home entertainment brands and content, for $51.5 million. Gaiam will retain its health and fitness media business. Cinedigm’s acquisition of GVE positions the Company as the market leader for independent film, TV and digital content distribution on every key entertainment platform, retailer and device across theatrical, the home and mobile. This accretive acquisition is expected to add more than $15 million of annual EBITDA to Cinedigm’s financial results.
The acquisition will be financed through a combination of: (i) a new $55 million senior-secured credit facility arranged and led by Société Générale Corporate and Investment Banking that includes a $25 million 3-year term loan funded at closing and an up to $30 million revolving credit facility of which $15 million will be drawn at closing; (ii) an up to $5 million subordinated 5-year loan facility; (iii) $3 million of restricted Cinedigm stock of which $1 million was issued to Gaiam and $2 million was purchased by an existing shareholder; (iv) an up to $13.0 million underwritten public offering of common stock, inclusive of an up to $1.5 million over-allotment, with B. Riley & Co., LLC and National Securities Corporation, a wholly owned subsidiary of National Holdings, Inc., acting as co-lead managers. The acquisition is expected to close October 21, 2013. Blackstone Advisory Partners L.P. acted as financial advisor to the company in connection with the acquisition of GVE and Merriman Capital acted as capital markets advisor for the equity offering.
“This acquisition of GVE gives Cinedigm immediate scale and leverage across the entire entertainment value chain. The combination of GVE’s deep stable of consumer-friendly brands and unique direct retail relationships – paired with Cinedigm’s tremendous strength in the rapidly evolving digital distribution space as well as our theatrical releasing and over-the-top network businesses -- creates a powerful and game-changing entity poised to take full advantage of the content distribution revolution,” said Cinedigm Chairman and CEO Chris McGurk. “This accretive acquisition fully complements our existing businesses, while providing immediate scale, EBITDA, cash flow, cost and revenue synergies, strong new management and tremendous opportunities for further growth.”
Adam Mizel, Cinedigm Chief Operating Officer and CFO, added: “Our efforts over the last 2 years to transform Cinedigm and completely refinance our balance sheet were designed in part to prepare us for a smart, accretive acquisition like GVE that would leverage our strong position in the digital entertainment revolution and dramatically accelerate our growth strategy. The $51.5 purchase price represents a multiple of approximately 3.3 times GVE’s 2013 estimated adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). We are particularly appreciative of the support we have received from our long term lead lender Société Générale as well as the support in our equity offering from many of our largest shareholders and our underwriting partners and advisors at B. Riley, National Securities and Merriman Capital”
Effective immediately GVE President Bill Sondheim will become President of Cinedigm’s Entertainment Group (CEG), and will report to Chris McGurk and Adam Mizel.
Over the past decade, Cinedigm has led the digital distribution revolution that continues to transform the media landscape. In addition to its pioneering role in transitioning movie theatres from traditional film prints to digital distribution, Cinedigm continues to advance worldwide cinema modernization with its suite of software products allowing exhibitors and distributors to manage their newly digital businesses with efficiency, insight and certainty. And, as the leading distributor of independent content in the world, Cinedigm collaborates with producers and the exhibition community with unequalled transparency to market, source, curate and distribute quality content across all digital platforms to targeted and profitable audiences.
Gaiam, Inc.’s entertainment unit, GVE, is a leading producer, distributor and marketer of entertainment media. With content focused on entertainment programming, GVE provides sales, marketing and distribution services to many of the home entertainment industry's most prestigious brands, including Discovery Communications, Hallmark Channel, NFL Films, National Geographic, Marvel Animation, Shout Factory, Televisa, and World Wrestling Entertainment.