Thomson today announced that it has signed an agreement to acquire 33 1/3% of the issued and outstanding shares of Canopus Co., Ltd, a Japan-based leader in high-definition desktop video editing software, through a private transaction with Chairman and CEO, Hiroshi Yamada, and members of his immediate family. Thomson also disclosed today that it will launch a public tender offer for the remaining Canopus shares on Tuesday, December 6, 2005.
The value of the private transaction combined with the pending tender offer would represent approximately €91.3 million (¥12.8 billion) on an equity value basis. Canopus had net debt, including debt secured on real estate owned by Canopus, of €5.2 million (¥712.6 million), as of August 31, 2005. Total Canopus revenues for the 12 months to August 31st 2005 were €50 million (approximately ¥6.8 billion) of which €40.5 million (¥5.5 billion) were in the core ProAV and video editing positions. The profitability of these operations, together with synergies, will result in a neutral impact on core business earnings in the first year and accretion thereafter. Overall, the business meets Thomson's acquisition criteria.
Taken with the discussions with Thalès on Thalès Broadcast & Multimedia (broadcasting and IP-TV), this transaction completes Thomson's external initiatives for its Grass Valley Broadcast & Networks business. Grass Valley is a key element of Thomson's Two Year Plan, as one of four primary revenue growth boosters. The acquisition fits with Thomson's objectives to broaden its media and entertainment client base -- and to support that, accelerated delivery of technologies ranging from desktop video editing, video over IP, and digital media conversion, among others. Accordingly, Thomson has now completed the external growth actions of its key primary boosters required for the Two Year Plan.
In addition to offering leading PC-based, multi-format digital and HD video editing systems, Canopus is a leading supplier of high-performance video encoding/decoding technology. Canopus also provides leading digital media conversion technologies, including a range of specialized devices that bridge the video/audio and PC worlds, allowing content to be moved easily between these different environments. Finally, Canopus also produces a multi-channel, multi-location video delivery solution that uses standard IP networks and display devices in enterprise-type applications such as digital signage for advertising and VOD applications for in-house video systems.
The Canopus product offering strengthens Grass Valley's position in several markets. Thomson and Canopus agree on the substantial opportunities which exist in professional video (Pro Video or non-broadcast video production applications), and professional A/V (ProAV or applications such as university or corporate media centers and distance learning). Based on internal and third-party data, Canopus technologies are estimated to address markets exceeding €1 billion, which Thomson does not address today. "Canopus brings important products and technologies that allow us to address multiple facets of our growth strategy and accelerate key elements of our R&D roadmap," said Marc Valentin, president of the Grass Valley business within Thomson.
Mr. Yamada will continue to play a leadership role in managing the Canopus business and in seizing the opportunities offered to the combined business by the professional AV and video editing markets. It is anticipated that the current Canopus management team will continue to lead the day-to-day business with the support and guidance of Grass Valley senior management. Under terms of the private transaction, Thomson is acquiring 33 1/3% of the issued and outstanding shares of Canopus from Mr. Yamada and his family. The purchase consideration will be settled 50% in cash and 50% in (821,917) Thomson S.A. shares.
Mr. Yamada, the single largest shareholder of Canopus, together with his family holds a total of approximately 40% of the shares of Canopus. The planned public tender offer is expected to last for a period of at least 42 days, and is anticipated to close January 16, 2006. Thomson is offering ¥148,000 per share, which reflects a premium of nearly 20% over the 30-day average closing price to December 2, 2005 of ¥123,900. Thomson will purchase all shares tendered to it, conditional upon receiving enough tenders to bring its shareholding in Canopus to a minimum of 77.87%. It is Thomson's ultimate intention to acquire 100% of the issued shares of Canopus and to fully integrate the company with its Grass Valley business, as well as to delist Canopus from the Tokyo Stock Exchange (assuming successful completion of the acquisition).