Belden Set To Acquire Grass Valley, Merge Ops With Miranda

In a move that joins two of the biggest brands in the live-television-production industry, Belden has submitted a binding offer to purchase Grass Valley for $220 million.

The deal will combine Grass Valley and Belden-owned Miranda under a single brand, Grass Valley, overseen by current Miranda President Marco Lopez from Miranda headquarters in Montreal. Grass Valley’s portfolio of production switchers, cameras, servers, and editing solutions for broadcast customers will be teamed with Miranda’s fiber, playout and automation, master-control, monitoring, multiviewer, routing, and signal-processing and -distribution solutions to create an end-to-end offering for live sports production.

“We are extremely excited to have Grass Valley join the Belden family,” Belden President/CEO John Stroup said in a statement. “By combining Grass Valley and Miranda, we will create the broadcast industry’s largest and most complete portfolio.”

The binding offer is subject to consultation with Grass Valley’s foreign-labor works council, after which the two companies will enter into a definitive agreement. This transaction is expected to close by March 31 and is subject to regulatory approvals, the completion of audited financial statements, and other customary closing conditions.

“We are extremely pleased with Belden’s pending acquisition of Grass Valley and look forward to being a part of the Belden family of companies once the transaction closes,” says Mike Cronk, SVP, Marketing, Grass Valley. “With their previous acquisitions of Miranda and Softel as well as their integration of Telecast, Belden has a proven strategic interest in broadcast.   We are very excited about our future with them.   Together, combining the strengths of our complementary product offerings with our mutual intellectual property, engineering talents and manufacturing capacity, we will be even better able to serve the needs of our live sports customers.”

Belden is purchasing Grass Valley from private-equity firm Francisco Partners, which acquired Grass Valley from Technicolor in July 2010 for $100 million. Technicolor had had its Grass Valley unit on the market since February 2009.

Industry Reaction
Early reactions from the remote-production industry that Grass Valley serves extensively have been largely positive. Several production-truck vendors praised the deal as a confidence-booster for them after a rocky few years for Grass Valley.

“I think it’s excellent news for us,” says Game Creek Video President Pat Sullivan. “It’s a great combination of some really smart folks at both Grass Valley and Miranda, so it can only be good news for us. I personally was very concerned about the future of Grass Valley recently, with some people getting laid off, outsourcing some manufacturing, and so on. So I think it’s a terrific development.”

CSP President Len Chase echoes that sentiment: “There is always the fear when you write that half-million–dollar check of how viable is the company you are buying from and what is its longevity? Belden has been around a very long time and has diversified themselves into a lot of different markets so you would hope that, overall, it will be very healthy for Grass moving forward.”

In December, NEP Broadcasting announced its plans to upgrade more than 30 of its remote-production trucks during the next three years with 26 Grass Valley K-Frame modular video-processing engines and four additional units. The new processors will be coupled with Kayenne and Karrera video-production switchers. As part of the upgrades, NEP will also allocate five Kayenne Classic frames to its fleet in the United Kingdom, adding Karrera panels for use on locations, including Wimbledon in June 2014.

“We were aware of a possible sale at the time [of our Grass Valley purchases] and view it very favorably,” says NEP SVP of Sales & Client Services Mike Werteen. “Belden provides GVG and Maranda a long term solid foundation for growth and innovation which is near and dear to us. Belden is taking the long view in terms of R&D investment, which is key to maintaining competitiveness.”

Grass Valley also now finds itself under the oversight of a company that is firmly entrenched in the television production industry, rather than a private-equity firm like Francisco Partners.

“I am much more comfortable when a television product company owns a television product company, rather than a private equity company owning it,” says Mobile TV Group President Phil Garvin. “The TV product ownership is going to better understand the business and we end up receiving better equipment and [customer service] as a result.”

Garvin also adds that he doesn’t expect much to change within Grass Valley’s strongest market segements. “They have assured me from a cameras and switchers standpoint, not much is going to change and we will continue getting the same level of service.”

Chase also sees the marriage between Miranda and Grass Valley as an obvious pairing given their complementary product lines. “We are a big Grass Valley proponent with our switchers and a Miranda proponent as well, so I think this is definitely a positive for us. Miranda doesn’t make a switcher or cameras, and Grass doesn’t do much in Miranda’s space. I’m quite sure there will be some crossover, but I would think this is going to be a good marriage.”

Belden Q4, 2013 Earnings Reports
The Grass Valley deal was announced as part of Belden’s fiscal fourth quarter and full-year 2013 results. On a GAAP basis, revenue for the quarter totaled $509.8 million, up $32.1 million, or 6.7% compared with $477.7 million in fourth quarter 2012. Gross margin in fourth quarter 2013 was 34.3%, increasing 280 basis points from 31.5% in the year-ago period. Operating profit margin in the fourth quarter was 9.6%, increasing from 6.6% in the year-ago period. Income from continuing operations per diluted share totaled $0.54, compared with $0.88 in fourth quarter 2012, a year-over-year decrease of 38.6%, largely a result of favorable discrete tax items in the year-ago period. Adjusted revenue for the quarter totaled $515.9 million, up $34.7 million, or 7.2% compared with $481.2 million in fourth quarter 2012. Adjusted gross margin in the fourth quarter was 35.2%, increasing 200 basis points from 33.2% in the year-ago period. Adjusted operating profit margin in the fourth quarter was 13.8%, increasing 230 basis points from 11.5% in the year-ago period. Adjusted income from continuing operations per diluted share totaled $0.91, compared with $0.78 in fourth quarter 2012, a year-over-year increase of 16.7%.

As for the 2013 full-year report,  on a GAAP basis, revenue for the year totaled $2.069 billion, up $228 million, or 12.4% compared with $1.841 billion in 2012. Gross margin in 2013 was 34.0%, increasing 320 basis points from 30.8% in the year-ago period. Operating profit margin in 2013 was 9.7%, increasing 380 basis points from 5.9% in the year-ago period. Income from continuing operations per diluted share totaled $2.34, compared with $0.94 in 2012, a year-over-year increase of 149%. Adjusted revenue for the year totaled $2.084 billion, up $237 million, or 12.9% compared with $1.847 billion in 2012. Adjusted gross margin in 2013 was 35.2%, increasing 310 basis points from 32.1% in the year-ago period. Adjusted operating profit margin in 2013 was 13.8%, increasing 270 basis points from 11.1% in the year-ago period. Adjusted income from continuing operations per diluted share totaled $3.69, compared with $2.80 in 2012, a year-over-year increase of 31.8%.

“Market demand appears to be stable in the majority of our end markets,” Stroup said in the statement. “This in combination with the execution of our Market Delivery System should create the catalyst for organic growth and margin expansion. Even after completing the acquisition of Grass Valley, our funnel and balance sheet will remain strong. We are confident that these initiatives position us to perform well, and we remain comfortable with our previously announced earnings outlook for 2014.”

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