Avid to be acquired by private equity firm STG for £1.1bn

Avid has entered an agreement to be acquired by private equity firm STG for $1.4 billion (£1.1bn).

The all-cash transaction values each share at $27.05, and is 32.1% over the company’s share price at closing on 23 May - just before it was reported that the company was investigating sale options. It’s largest shareholder is Impactive Capital LP, and after this sale it will become a privately owned company.

Avid products Avid Media Composer and Avid Pro Tools have been leading video and audio editing tools, respectively, in the film and TV industry for many years. In its first-quarter earnings this year, Avid’s active paid software subscriptions grew 22% year-on-year. Reuters reported that the company missed analysts’ expectations, though, and its shares were down around 20% before rumours of the sale.

The second quarter earnings have been released with the acquisition news, and show that Avid’s revenue has grown to $108.5 million (£85m), an increase of 11.1% year-over-year or 13.0% at constant currency.

STG, which invests across data, software, and analytics, is funding its agreement through a combination of equity and debt financing and is not subject to a financing condition. It has a portfolio of over 50 companies globally.

Goldman Sachs & Co. LLC is serving as financial advisor to Avid, and Sidley Austin LLP is serving as legal counsel. Rothschild & Co is serving as financial advisor to STG, and Paul Hastings LLP is serving as legal counsel to STG. Sixth Street Partners and Silver Point are providing committed debt financing in support of the transaction.

Jeff Rosica, Avid’s CEO and president, said: “Since our founding over 30 years ago, Avid has delivered technology that enables individuals and enterprises who create media for a living to make, manage and monetize today’s most celebrated video and audio content across the globe. We are pleased to announce this transaction with STG, who share our conviction and excitement in delivering innovative technology solutions to address our customers’ creative and business needs.

“STG’s expertise in the technology sector and significant financial and strategic resources will help accelerate the achievement of our strategic vision, building on the momentum of our successful transformation achieved over the past several years. This transaction represents the start of an exciting new chapter for Avid, our customers, our partners and our team members and is a testament to the importance of Avid and our solutions in powering the media and entertainment industry.”

John P. Wallace, chairman of the Avid board of directors, added: “This transaction is the result of a comprehensive review of strategic alternatives for Avid. Upon closing, this transaction will deliver immediate, significant and certain value to our stockholders. After carefully evaluating a variety of options, the Board determined that this transaction is in the best interests of Avid and its stockholders.” 

William Chisholm, managing partner of STG, commented: “STG has admired Avid’s heritage as a category creator and pioneer in the media and entertainment software market for many years. We are excited to partner with Jeff and the management team to build on the Company’s history of delivering differentiated and innovative content creation and management software solutions. We look forward to leveraging our experience as software investors to accelerate Avid’s growth trajectory with a deep focus on technological innovation and by delivering enhanced value for Avid’s customers.”