Digital media company Technicolor explores options including sale -sources

Vantiva SA

16/11/2018 20:07

By Pamela Barbaglia and Liana B. Baker
    LONDON/NEW YORK, Nov 16 (Reuters) - Technicolor SA  TCH.PA 
has been exploring options that include a full or partial sale
of the French digital media company, as its set-top box business
struggles because of higher prices for memory chips, people
familiar with the matter said on Friday. 
    A deal would represent the biggest shakeup for the company,
based in Issy-les-Moulineaux, since it agreed in March to sell
its profitable patent licensing business to U.S. wireless
technology provider InterDigital Inc  IDCC.O  for $475 million.
    Technicolor has been in discussions in recent months with
other companies and private equity firms, including Bain
Capital, about a sale of the company or a merger with a peer,
the sources said. 
    Technicolor has also been exploring a sale of just its
set-top box division, which it calls connected home, the sources
said. One of the sources said the company received non-binding
offers for that unit earlier this month. 
    Connected home accounted for 1 billion euros ($1.14 billion)
of Technicolor's total revenue of 1.77 billion euros in the
first half of 2018.
    The sources cautioned that no deal is certain and asked not
to be identified because the matter is confidential.
    Technicolor, which trades on France's Euronext and has a
market value of 503 million euros, declined to comment. Bain
Capital did not immediately respond to a request for comment.
    Technicolor operates two main divisions, entertainment
services and connected home. The entertainment services business
helps provide the visual effects seen in movies and commercials,
as well as Blu-ray and DVD manufacturing.
    In 2015, Technicolor acquired Cisco Systems Inc's  CSCO.O 
set-top box business, a $600 million deal intended to boost its
presence in the home entertainment market and expand its North
American footprint.
    But the bet soured as higher input costs weigh on
Technicolor's set-top box business. Passing these costs on
appears difficult given the strong bargaining power of its
larger customers and competition in the equipment sector, credit
ratings agency Moody's Investors Service Inc said in a note
earlier this year.
    Technicolor's adjusted earnings before interest, taxes,
depreciation and amortization from continuing operations fell 30
percent year-on-year in the six months to the end of July to 57
million euros.


 (Reporting by Pamela Barbaglia in London and Liana B. Baker in
New York
Additional reporting by Gwenaelle Barzic in Paris
Editing by Leslie Adler)
 ((pamela.barbaglia@thomsonreuters.com;  +442075427723; Reuters
Messaging: pamela.barbaglia.thomsonreuters.com@reuters.net))