Videndum PLC · LSE:VID
Videndum — The Vitec Group — Merger or Acquisition (May 2007)
17 slides from Videndum's merger presentation, May 2007
Slide 1: Vitec Group RF Systems 'Consolidate and Grow'
Vitec Group RF Systems ‘Consolidate and Grow’ Gareth Rhys Williams, Alastair Hewgill May 2007
Slide 2: Important notice
Important notice This presentation is being made only to, and is only directed at, persons to whom such presentations may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in the foll
Slide 3: Rationale for transaction
Rationale for transaction Complementary business segment in an area Vitec understands, with shared customer base Attractive markets, BAS and beyond Vitec’s experience and market weight to assist in driving market share growth and profitability Near term profit growth and 4-year earn out structure ai
Slide 4: Consolidation, Leverage, and Growth - in line with established strategy
Consolidation, Leverage, and Growth - in line with established strategy Consolidation improves offering to customers Broadcast market typically served by specialist companies Products adjacent to Vitec’s Ancillary to the camera, but essential for operation Vitec’s products are ‘all around the camera
Slide 5: Vitec Group RF Systems Market positioning
Vitec Group RF Systems Market positioning
Slide 6: Vitec Group RF Systems Overview
Vitec Group RF Systems Overview Makes, sells and maintains wireless links for broadcasters Strong US customer base Broadcasters use (their own) wireless links to transmit video from a mobile camera to the studio via a number of links from the studio to the transmitter Can be analogue or digital In 2
Slide 7: Vitec Group RF Systems – May 2007
Vitec Group RF Systems – May 2007 7
Slide 8: Constituent companies
Constituent companies Key parts of a combined offering Nucomm (US) – technology leader in fixed and mobile links RF Central (US) Sales, integration and installation of wireless products With agreement to acquire MSC, a leading US Microwave repair house Owners staying with the business, incentivised
Slide 9: Full range of wireless links
Full range of wireless links Vitec Group RF Systems – May 2007 9
Slide 10: 'BAS'/Nextel project
‘BAS’/Nextel project Nextel bought part of the US radio spectrum (2GHz) Broadcasters presently use this for wireless transmission Nextel paying to “squeeze” the broadcasters’ spectrum Can only be done with digital equipment All 2GHz analogue gear to be replaced by Nextel with ‘Standard Definition’ d
Slide 11: Current market situation
Current market situation VGRFS probably No 2 in US at current order rate Share increasing due to BAS project Fragmented wireless supplier base historically break- even Targeting improved outcome due to expected market share and integration benefits VGRFS loss-making in 2006 due to huge build up of i
Slide 12: Transaction structure
vitecgroup Transaction structure
Slide 13: Two separate but simultaneous transactions
Two separate but simultaneous transactions Upfront payments totalling $38.5m (£19.4m) Earnout of max $37.3m (to existing shareholders) based on post tax profits in 2007-2010 Max payment of $73m (£36.9m) Earn-out thresholds based on returning upfront plus notional interest during the BAS project Vite
Slide 14: Financing the acquisition
Financing the acquisition Upfront is $38.5m Shares: $3.5m Cash payments: $35m Includes future cost of MSC of $3m ($2m cash, $1m shares) Assumes net cash of $2.8m at closing Earn-out at least 50% Vitec shares, the rest cash Cash requirements well within existing facilities Pro-forma net debt of £39.8
Slide 15: Expected financial effects
Expected financial effects BAS inventories are prepaid by Nextel Cash flow thus runs ahead of sales and profits Current trading reflects the commencement of deliveries to broadcasters Significant sales ‘bulge’ during BAS years 2007, 2008 and 2009 Stable growth thereafter from lower base Goodwill to
Slide 16: Consolidate and Grow
Consolidate and Grow Vitec will have a significant and growing part of the broadcast wireless products and services market - Benefiting from the Nextel / BAS project - Forming a sustainable and valuable business thereafter Complementary business segment in an area Vitec understands, with shared cust
Slide 17: Vitec Group RF Systems 'Consolidate and Grow'
Vitec Group RF Systems ‘Consolidate and Grow’ Gareth Rhys Williams, Alastair Hewgill May 2007