(News Bulletin 247) – Vantiva, the group resulting from the spin-off of Technicolor’s historic activities, will change dimension with the acquisition of the connected home division of the American CommScope.

Vantiva wants to accelerate in the connected home. The French group, which brings together the historic activities of the former Technicolor in this innovative sector, announced on Tuesday that it had concluded an agreement with the American CommScope with a view to acquiring its “Home Networks” activity.

This company provides equipment offering residential connectivity solutions and video decoders. For Vantiva, this acquisition will help strengthen its connected home business. “The acquisition of CommScope Home Networks would be a transformative transaction for Vantiva, significantly strengthening its capabilities in the Connected Home space,” Vantiva said in today’s press release.

Vantiva would integrate CommScope’s Home Networks business into its Connected Home division. According to the French company, the acquisition of the American’s domestic networks division will allow it to gain scale. CommScope Home Networks has in fact achieved a turnover of 1.5 billion dollars over the last 12 months ending June 30, 2023, almost as much as the Connected Home division of Vantiva, which made 2 billion euros of turnover over the same period.

A change of size

The amount of the acquisition, which is expected to be finalized at the end of the fourth quarter of 2023, has not been disclosed. But this merger should be a source of economies of scale. It should thus provide 100 million euros of synergies (before taxes) in a full year from 2026, mainly thanks to cost optimization initiatives and better operational efficiency. Vantiva estimates that this potential for synergies should “significantly” improve its cash generation from 2025.

In return for the transfer of its “Home Networks” activity to Vantiva, CommScope will have a stake in the French group at the end of the operation, representing 25% of the financing round on a fully diluted basis, through a capital increase reserved for the American.

In addition, CommScope will also receive a maximum cumulative earnout amount of $100 million, subject to Vantiva achieving (at constant scope) an equal Ebitda (gross operating surplus). or greater than 400 million euros in a given fiscal year during the 5 years following the first financial year after the conclusion of the acquisition. The annual payment of this additional price cannot, however, exceed $50 million, specifies Vantiva.

Remember that Vantiva came from the reorganization of Technicolor which had been in great difficulty for years. The French specialist in technologies serving sound and image then decided at the beginning of 2022 to split into two distinct entities: Vantiva, which brings together the historical activities (development of white label modems, and DVD production) of Technicolor and Technicolor. Creative Studios, bringing together its activities in visual effects for cinema, video games, animation and advertising.

End clap for TCS

Since September 2022, Vantiva and TCS have operated separately on the Paris Stock Exchange. However, the stock market destiny of Vantiva remained closely linked to the course of TCS, the former having a residual stake of 35% in the latter.

TCS shares were thus introduced on Tuesday September 27, 2022 at a price of 1.95 euros per share, corresponding to a valuation of more than one billion euros for the entire group. TCS’s independence came at a high price, sinking into the stock market abyss until the company decided to consolidate its shares last June to escape the unenviable status of a penny stock.

This stock market rout is linked to the degraded situation of Technicolor Creative Studios. The strikes in Hollywood and the unfavorable macroeconomic environment have led to a reduction in activity and a decline in financial and operational performance for the first half of 2023. TCS even incurred more than 600 million euros in net debt at the end June 2023, according to the half-year results published Monday evening after the stock market. The company even indicated that it had received an additional contribution of funds amounting to 30 million euros to meet its liquidity needs.

But Vantiva’s stock market destiny will no longer depend on the rout of TCS stock. A large group of TCS shareholders and lenders wish to withdraw the last shares of the special effects specialist still in circulation on the Paris Stock Exchange and are offering minority shareholders a price of 1.63 euros, compared to a last listed price of 1.629 euros on Friday. evening.

This operation will be carried out without great difficulty, this concert of shareholders and lenders currently holds 94.82% of the capital and voting rights of TCS, well above the required threshold of 90% of the capital and voting rights. to ensure the success of this delisting.

“The proposed delisting would allow Technicolor Creative Studios to focus on executing its long-term strategy and devote its resources to its operational objectives, including strengthening relationships with its current clients and developing new business opportunities,” says TCS.

On the Paris Stock Exchange, Vantiva soared by 24% around 10:45 a.m. after the announcement of the operation with the American CommScope. The proposed delisting of TCS is also likely to fuel buyer flow on Vantiva shares.