The Deal: Ballantyne Buys Sony Division

NEW YORK (The Deal) -- Ballantyne Strong shares increased 8% Tuesday after the cinema technology company announced it was finally putting some of its cash to use with the acquisition of Sony Electronics'  (SNE) digital media subsidiary, Convergent Corp

Omaha, Neb.-based Ballantyne said Tuesday that the all-cash transaction is valued at about $16 million. Convergent operates as Convergent Media Systems Corp. 

Sony, which purchased Convergent from Technicolor SA on Jan. 28, 2010, for an undisclosed price, had been shopping the division, Convergent spokesman Kris Konrath said. 

"[Convergent] became less core to its business at Sony and so it reached out to the investment community," Konrath said. "Ballantyne looked at us as having strong potential to improve its revenue number." 

Ballantyne said Tuesday it expects the transaction to be between $0.06 and $0.10 accretive to earnings per share in 2014 and add between $0.15 and $0.20 in 2015. 

Alpharetta, Ga.-based Convergent generates annual revenue of about $40 million and averaged $700,000 in annual EBITDA over the previous three years, Ballantyne added. 

Founded in 1980, Convergent offers video services and digital technology for out-of-home advertising and communication purposes involving more than 22,000 locations and more than 95,000 displays. Its customers include Kroger, Safeway and Best Buy in Canada. Though it remains unclear how long Sony had been pursuing the sale of the division, reported in April that Convergent was up for sale. 

Ballantyne CEO Gary Cavey said in a Tuesday conference call that as part of a much larger corporation, Convergent didn't have the necessary resources or opportunity to expand and broaden its customer base. 

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