DG® (NASDAQ: DGIT), the world's leading ad management company,
today announced that it has entered into an agreement, which was
unanimously approved by its Board of Directors, to sell its
television ad delivery business to Extreme Reach, Inc. for $485
million. The proceeds will be used by DG to pay off all outstanding
debt and fund the majority of a planned cash distribution to DG
stockholders of at least $3 per share. In addition, DG stockholders
will receive a distribution of shares of a company that will hold
DG's online business ("The New Online Company.")
The New Online Company will emerge with almost all of DG's
working capital, including that attributed to both the online and
television businesses. Total working capital for the television
business alone at June 30, 2013 was approximately $40 million,
excluding cash, bringing the total economic value for the sale of
the television business to $525 million. A portion of the cash and
working capital at closing will help fund the anticipated cash
distribution to shareholders. The New Online Company's initial
capital structure is forecasted to have approximately $20 million
of cash and $50-60 million of net working capital.
In addition, DG committed to provide a potential equity
investment of $40 million cash in Extreme Reach ("ER"), if
required, to close the transaction. If DG's equity investment is
ultimately required, at closing, ER will provide DG with $45
million of preferred stock with terms and conditions consistent
with ER's most recent offering. If such $40 million investment is
not required, ER will pay DG an additional $5 million in cash at
closing and the incremental $45 million will then be available to
fund stockholder distributions and working capital for The New
Online Company.
Commenting on the agreement, DG's Chairman, Scott Ginsburg,
stated, "We are very pleased with the developments announced today.
We believe these proposed transactions will provide DG shareholders
with a significant cash distribution by monetizing DG's television
business, while providing shareholders a continued stake in the new
online business. These transactions also allow the Company to repay
all debt, strengthen our balance sheet and provide us with a more
focused strategy to pursue opportunities in the emerging digital
landscape."
"By concentrating exclusively on the digital market, The New
Online Company can be laser-focused on meeting the challenges
facing marketers due to the massive fragmentation of technologies
and audiences," said Neil Nguyen, CEO and President of DG. "I am
excited about the opportunity to build upon the past few quarters'
strong momentum. Our global footprint, market leading campaign
management platform and analytics capabilities position us as a
major player in the future of digital advertising."
BofA Merrill Lynch acted as financial advisor to DG in
connection with the transaction. Latham & Watkins LLP acted as
legal advisor to DG on the transaction.
The transaction is expected to close during the first quarter of
2014 following DG stockholder approval and the expiration of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act. Immediately prior to the merger, the outstanding DG shares
will be partially redeemed for new shares of The New Online Company
which are expected to be listed on the NASDAQ Global Market.
These and other considerations will be set forth in greater
detail in a proxy and information statement that DG will file with
the SEC and distribute to stockholders in advance of a special
meeting anticipated to be held in the fourth quarter of 2013 to
approve the transaction. MacKenzie Partners Inc. is acting as the
Company's proxy solicitation and information agent in connection
with the transaction.
Conference Call and Webcast
The Company will host a conference call and webcast at 8:30 a.m.
ET on August 13, 2013 to discuss the transaction. To access the
conference call by telephone, interested parties may dial
800-510-0146 and enter passcode 87525582. International callers may
access the call by dialing 617-614-3449. Please call five minutes
in advance to ensure that you are connected. A replay will also be
available for seven days following the call. To access the replay,
interested parties may dial 888-286-8010 and enter passcode
76190609. International callers may access the replay by dialing
617-801-6888. Participants can access the webcast at www.dgit.com.
For the webcast, please allow 15 minutes to register and download
any necessary software. Questions and answers will be taken only
from participants on the conference call. Following the call's
completion, a replay will also be available for 30 days on the
Company's website.
Cautionary Note Regarding Forward-Looking
Statements
This press release may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Any statements that are not statements of historical fact
(including statements containing the words "believes," "plans,"
"anticipates," "expects," "estimates" and similar expressions)
should also be considered to be forward-looking statements. There
are a number of important factors that could cause actual results
or events to differ materially from those indicated by such
forward-looking statements, including: the ability to consummate
the proposed transactions; the ability to obtain the requisite
regulatory or stockholder approvals in a timely manner or
otherwise; failure to satisfy other conditions to consummation of
the transactions; the ability of Extreme Reach to consummate the
necessary debt financing arrangements set forth in financing
letters received by Extreme Reach; the ability for The New Online
Company to achieve the benefits of the transactions or that such
benefits may take longer to realize than expected; changes in
government regulation; the ability to successfully separate
operations and employees; the potential impact of the announcement
of the transactions or consummation of the transactions on
relationships with employees, suppliers, customers and competitors;
international, national or local economic, social or political
conditions that could adversely affect the parties to the
transactions or their customers; conditions in the credit markets;
and the parties' international operations, which are subject to the
risks of currency fluctuations and foreign exchange controls and
the other risks and uncertainties that affect the parties'
businesses, including those described in DG's Annual Report on Form
10-K for the year ended December 31, 2012. In addition, any
forward-looking statements represent DG's estimates only as of the
date hereof and should not be relied upon as representing DG's
estimates as of any subsequent date. DG disclaims any intention or
obligation to update any forward-looking statements as a result of
developments occurring after the date of this press release.
Important Additional Information about the
Merger and Where to Find It
In connection with the transactions contemplated by the merger
agreement, DG plans to file with the SEC and mail to its
shareholders a proxy and information statement in connection with
the merger. Additionally, DG will file other relevant materials
with the SEC in connection with the proposed transactions pursuant
to the terms of the merger agreement. Investors and shareholders
are urged to read the proxy and information statement and any other
relevant documents carefully when such documents are available.
Investors and shareholders will be able to obtain free copies of
the proxy and information statement and other documents filed with
the SEC by DG when available through the web site maintained by the
SEC at www.sec.gov.
In addition, investors and shareholders will be able to obtain
free copies of the proxy and information statement from DG by
contacting Investor Relations, Digital Generation, Inc., 750 West
John Carpenter Freeway, Suite 700, Irving, Texas 75039, (972)
581-2000.
DG and its directors and executive officers may be deemed to be
participants in the solicitation of proxies in respect of relating
to the transactions contemplated by the merger agreement.
Information regarding DG's directors and executive officers is
contained in DG's Annual Report on Form 10-K and Amendment No. 1 to
the Annual Report on Form 10-K for the year ended December 31, 2012
as filed with the SEC on March 15, 2013 and April 30, 2013,
respectively.
About DG
DG (NASDAQ: DGIT) is the leading global multiscreen advertising
management and distribution platform, fueling campaign management
across TV, online, mobile and beyond. Through a combination of
technology and services, DG empowers brands and advertisers to work
faster, smarter and more competitively. Boasting the world's
largest hybrid satellite and Internet network for broadcast video
delivery, DG's unparalleled campaign management encompasses
multiscreen ad delivery, cross-channel research and analytics, and
unified asset management. The DG product portfolio consists of two
overarching product lines for online and video campaign management:
MediaMind and VideoFusion.
With New York as a center of operations, DG is a global company
that connects over 14,000 advertisers and 7,400 agencies worldwide
with their targeted audiences through an expansive network of over
50,000 media destinations across TV broadcast and digital
advertising in 78 countries, managing approximately ten percent of
the world's media assets. For more information, visit
http://www.dgit.com.
For more information contact: JoAnn Horne Market Street Partners
415/445-3233 Dan Burch / Laurie Connell MacKenzie Partners, Inc.
212/929-5500
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