Extreme
Reach has announced plans to acquire the advertising distribution business unit
and other TV businesses of Digital Generation, Inc. (DGIT) for around $485
million.
The
deal is subject to approval by DGIT shareholders and
regulators.
The
move will greatly expand Extreme Reach's platform for managing and delivering
video advertising campaigns for TV, online, mobile and connected TV.
Extreme
Reach, which is headquartered in Needham, Mass. and has offices in New York, Chicago, Burbank (Calif.), Detroit, Toronto, San Francisco, Dallas, Seattle and Louisville, currently works
with more than 3,000 advertisers and agencies.
As
a result of the deal, DGIT, which is been a
major player in delivering broadcast content, ads and production services to
the TV industry, will no longer offer broadcast-related services, the companies
said.
It
will instead shift its focus to its online media and services businesses,
including its MediaMind offering.
DGIT has been exploring a possible sale
since 2012 but as recently as June had rejected an offer from Extreme Reach,
according to Bloomberg.
"Our
vision from day one has been to power digital video advertising," said John
Roland, CEO of Extreme Reach. "This acquisition is a major step in that
direction. Our platform is the first platform to leverage the same...[30 second]
commercial across TV, online and mobile."
The
companies reported that the transaction will take place in "two contemporaneous
steps" with DGIT distributing its online
business to DGIT shareholders in the form of a new
publicly-traded company and Extreme Reach acquiring the remaining DGIT business in a cash
merger.
The
acquisition will be financed by a combination of cash and debt financing as
well as new equity from existing investors of Extreme Reach.
J.P.
Morgan and SunTrust Robinson Humphrey have agreed to act as joint lead
arrangers and joint bookrunners for a proposed $475 million Term Loan
syndication to finance the deal.
Spectrum
Equity, which invested $51 million in Extreme Reach in May 2013, has agreed to
invest as much as $47 million to facilitate the acquisition.
The
companies expect the transaction to close in the first quarter of 2014.
Berenson
& Company acted as exclusive financial advisor and Pierce Atwood LLP acted
as legal advisor to Extreme Reach in the transaction, according to the
companies.
