Belden discloses details on SAM Acquisition

SEC filing reveals that SAM was not profitable at the time and Belden's valuation of the company was $104.5 million.
Snell Advanced Media was acquired by Grass Valley, a Belden company
Snell Advanced Media was acquired by Grass Valley, a Belden company

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In its SEC filing for its Q2 2018 financial report, Belden disclosed additional details on the pricing of its acquisition of Snell Advanced Media (SAM) which was rolled into the Grass Valley brand. The SEC filing reveals that SAM was not profitable at the time and Belden's purchase valuation of the company was $104.5 million.

The net purchase price of the acquisition of $104.5 million included $19.3 million debt, earnout valued at $29.3 million, and a cash component of $55.9 million. According to the filing, SAM was not profitable at the time of the acquisition, reporting a loss before taxes during the first half of the year of $9.4 million, though this included a $29.5 million restructuring charge.

Belden also reported that it expects an additional restructuring charge of $22 million during the rest of 2018. These relate to the consolidation of facilities and support functions and the figures are consistent with Belden CEO John Stroup's remarks on a recent earnings call that the company expects to spend $50 million overall for the integration of SAM.

Media Technology analyst Devoncroft Partners estimated that first half results for 2017 and 2018 indicate annual revenues for SAM in the range of $125 – $130 million. The analyst thus considered that the deal valuation represents a revenue multiple of approximately 0.8x of SAM's trailing 12-month revenue.

Devoncroft Partners said in a blog post that, "For all M&A professionals and investors in the media technology sector, this is a directly comparable transaction to use as a valuation guide." 

The analyst further commented, "Some caution is needed to immediately conclude SAM has an annual revenue twice its first half because the second half tends to have larger sales volumes in the media technology sector than the first."

Belden CEO John Stroup

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