Cinedigm Corp. (NASDAQ: CIDM) (“Cinedigm” or the “Company”) today announced it has agreed to acquire Gaiam, Inc.’s (NASDAQ: GAIA) 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.
When combined, Cinedigm and GVE will have:
- A market position as the largest aggregator and distributor of independent content and the fourth largest distributor of non-theatrical DVD’s and Blu-Ray discs in the U.S.
- Annual retail sales exceeding $320 million from both physical products and digital sales;
- Exclusive, multi-year relationships with a wide range of brand name content suppliers, including WWE, NFL, Hallmark, National Geographic, Discovery, Scholastic and The Jim Henson Company;
- Direct sales and marketing relationships with almost every major physical and digital retailer, including Wal-Mart, Target, iTunes, Netflix and Amazon;
- A huge library of digital distribution rights for independent films, TV series and other content that includes more than 32,000 titles and episodes
- The largest physical retail footprint of any independent studio distributor in the United States, with products sold through over 60,000 retail locations; and,
- Strong, experienced corporate and operating management bolstered by the addition of many key GVE employees.
Cinedigm has agreed to acquire GVE for $51.5 million, subject to working capital adjustments. 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. (OTCBB:NHLD), 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. Please see our separate press release on the underwritten public offering.