US private equity firm Vector Capital plans to acquire up to 30% of Technicolor, the French audiovisual group and STB maker, in a move that could scupper a previous bid from JP Morgan Chase.
Vector, which already holds a 0.6% stake in Technicolor, is…
US private equity firm Vector Capital plans to acquire up to 30% of Technicolor, the French audiovisual group and STB maker, in a move that could scupper a previous bid from JP Morgan Chase.
Vector, which already holds a 0.6% stake in Technicolor, is looking to acquire a greater share of the group in a two-step process.
The first part will see it acquire 17.5% of the company for €1.9 per share. Then, in a second issue to existing shareholders, it will offer €1.56 per share to amass a total stake of no more than 30%.
In return, Vector is seeking to be able to appoint two candidates to Technicolor’s board. It is also calling on the group’s shareholders to reject an acquisition proposal submitted earlier in May by Jesper Cooperatief, an entity controlled by JP Morgan Chase.
Jesper’s proposal also concerns a two-part stake acquisition process. But it will see Jesper initially offer only €1.6 per share in a private placement, followed by a rights issue also at €1.56 per share. Jesper’s final stake in Technicolor is set at a minimum holding of 25% and a maximum 29.96%.
However, on 30 May, Technicolor announced that its board is recommending shareholders approve Jesper’s offer, and reject Vector’s unsolicited approach.
The board reasoned that it would benefit from “its association with JP Morgan Chase, its global brand, its experience and industry expertise”. In addition, Jesper is offering a fully-negotiated 30-month agreement regarding Technicolor’s governance, which the company describes as providing key support towards achieving its 2015 strategic plan, as well as maximising shareholder value.
Vector, meanwhile, has “expressed support for the company’s strategy as defined in its Amplify 2015 strategic plan without specifying precisely its declaration of intent vis-à-vis the company following the planned capital increase it proposes”, stated Technicolor.
Up to €158m would be raised from Jesper’s planned capital increase, corresponding to up to 99,193,696 shares. Vector’s plan would raise up to €186m, corresponding to up to 109,114,822 shares.
Both proposals will go before a shareholder meeting scheduled for 20 June.
Technicolor plans to use proceeds from a capital increase to reduce its debt burden and increase headroom for financial covenants.
Its debt reportedly stood at €957m at the end of 2011.
Commenting on Jesper’s proposal earlier this month, Technicolor CEO Frederic Rose said: “The capital increase we are planning will provide the company with a stronger financial structure and a stable shareholder base to implement its growth strategy. The planned investment is a strong evidence of confidence in Technicolor and an endorsement of our strategy and growth potential.”
