Avid says the purchase of the Israel-based 3D graphics and video server company will help Avid’s growth by adding key content creation and media management solutions.
Avid Buying Orad Hi-Tec For $60 Million
Avid announced Sunday that it has signed a definitive agreement to acquire Orad Hi-Tec Systems Ltd., a Frankfurt stock exchange-listed public company with its headquarters in Kfar Saba, Israel, for €5.67 per share in an all-cash transaction (approximately $60 million.)
Orad is a provider of 3D real-time graphics, video servers and related asset management solutions. The company said the acquisition is consistent with Avid’s stated growth strategy and Avid believes it will continue to deliver on the company’s Avid Everywhere vision, by adding key content creation and media management solutions to the Avid MediaCentral Platform.
Avid said it expects the transaction to be accretive on an adjusted EBITDA and cash flow basis, and will be financed by a new $100 million senior subordinated credit facility.
“We have followed Orad’s success in the market for many years and are excited about the prospects of what our combined companies can accomplish,” said Louis Hernandez Jr, Avid chairman, president and CEO. “Our industry is in a period of significant transition, in which our customers are demanding a single platform to connect creation with collaboration, asset protection, distribution and monetization. We believe this transaction further differentiates Avid as the partner with the most comprehensive solution, and accelerates our momentum as we enable our customers to operate more efficiently and profitably.”
“Avid has a long-standing heritage of industry leadership, and it’s clear that both Avid and Orad have a common commitment to innovation and customer success,” said Avi Sharir, CEO-president of Orad. “Our solutions are highly complementary to the Avid product suite, and together we believe we can create the most comprehensive solution for the media industry. Further, Avid’s global scale and distribution network provide significant opportunities for customer support, growth and market expansion. We are confident that joining the Avid family will create more powerful opportunities for our customers, partners, and employees.”
Under the terms of the agreement, Avid has agreed to pay €5.67 in cash for each share of Orad common stock which, at today’s exchange rate equals approximately $60 million, net of estimated cash acquired. “We believe this valuation represents an approximate 6x multiple of EBITDA, net of estimated cost synergies leveraging our platform thus generating attractive economics for us and a richer more efficient experience for our customers,” said John Frederick, Avid’s EVP and chief administrative and financial officer.
The transaction is subject to customary closing conditions, including approval by 75% of Orad’s shareholders and closing is expected to take place in June. Avid has entered into voting agreements with holders of a majority of Orad’s outstanding shares of capital stock, pursuant to which they agree to vote in favor of the transaction. Avid intends to fund the purchase price with a $100 million secured term loan for which it has received a financing commitment.