Gaiam, Inc. (NASDAQ: GAIA) (“the Company”), a lifestyle media company, today announced that it has entered into a definitive agreement to sell its non-branded entertainment media distribution business (“GVE”) to Cinedigm Corp. (NASDAQ: CIDM) for $51.5 million. The sale price also includes an adjustment for closing net working capital that is expected to total approximately $5 million to $7 million in additional cash consideration. The transaction is expected to be consummated next week, subject to the satisfaction of customary closing conditions. The Company is retaining all its Gaiam branded media business.
Following the consummation of the transaction, Gaiam will focus on its two core businesses, the Company’s branded health and wellness business, including Gaiam branded fitness media content and products, which have a presence in over 40,000 retail doors, as well as the Company’s branded e-commerce platform, and on Gaiam TV, the Company’s streaming video subscription business. Gaiam TV currently provides over 5,000 exclusive video titles, including films, documentaries and original programming dedicated to conscious media, personal growth, and spirituality, and has the world’s largest online library of yoga, fitness, and wellness videos. Gaiam continues to be the leader in U.S. health and wellness media with an approximate 40% market share over the twelve month period ended September 30, 2013.
Gaiam intends to utilize the proceeds from the transaction to fully pay down the outstanding borrowings under its existing credit facility, which are estimated to be approximately $10 million net of related cash inflows between the transaction signing and consummation dates, and to pursue organic and potential acquisition growth initiatives for the Company’s core businesses. The Company does not expect to pay taxes on the sale, as it intends to utilize a portion of its net operating loss carry forwards to fully offset any income tax gain.
Lynn Powers, Chief Executive Officer of Gaiam, commented, “Monetizing the value of our non-branded entertainment media distribution business reflects our strategic emphasis on pursuing growth in our core health and wellness and Gaiam TV businesses. Since combining Vivendi Entertainment with our existing entertainment media distribution operations in March 2012, we have achieved our goal of growing GVE to become the leading independent - and second largest overall - distributor of non-theatrical content in the U.S. by bringing added scale and operational synergies to the business, making GVE a more unique, valuable and attractive asset. The value we are realizing from this transaction represents a good return for our shareholders and further strengthens our balance sheet and financial flexibility. Our strong financial profile and targeted business focus favorably positions the Company to invest its management and financial resources to achieve growth both organically and through acquisitions within our core operations.”
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts