Vector wins Technicolor stake battle
Following a General Shareholders’ Meeting, media and entertainment technologist Technicolor has confirmed that the shareholders approved by a large majority the resolutions relating to the transaction proposed by Vector Capital Corporation (Vector) in its offer dated May 25 and amended on June 13.
Vector will become Technicolor’s main shareholder, despite the board’s recommendation to vote for a revised offer from rival bidder JPMorgan, which was updated during Wednesday’s shareholders meeting, and despite the deal signed between the two parties in May.
JPMorgan’s offer was rejected by 95 per cent of voting shareholders while Vector’s offer gained 91 per cent approval during the vote that took place four hours after the meeting had started.
Vector last week raised the subscription price for its proposed reserved capital increase to €2.00 per share from €1.90 against a final offer of €1.90 from JPMorgan.
“We are neither as large nor as old as JPMorgan. But the team that we have assembled can address the challenges and opportunities your company is facing,” Alexander Slusky, founder and managing partner of Vector Capital had told shareholders, adding he wanted to build a bridge between France and the Silicon Valley.
The transaction will take place in two stages:
- Technicolor will issue 47,471,506 shares through a reserved capital increase to Petalite Investments S.à r.l., an investment vehicle controlled by Vector, at a price of €2.00 per share (the Reserved Capital Increase);
- Technicolor will issue 61,643,316 shares in a capital increase with preferential subscription rights at a price of €1.56 per share (the Rights Issue). Vector has irrevocably committed to subscribe up to 75 per cent of the amount of the Rights Issue to ensure its success.
The level of participation of existing shareholders in the Rights Issue will determine Vector’s final stake in Technicolor. Following the Rights Issue, Vector will hold between 18 per cent and 29.94 per cent of Technicolor’s share capital.
These capital increases, of an amount comprised between €167 million and €191 million will allow Technicolor to strengthen its balance sheet and enhance its capabilities to implement its ‘Amplify 2015′ strategic roadmap, which aims to make Technicolor a leader in innovation in media monetisation solutions by:
- Expanding its innovation pipeline and Licensing business;
- Developing innovative solutions to address expanding digital media markets;
- Consolidating its activities and expanding geographically to gain scale or access to broader ecosystems.
Technicolor says the capital increases will also contribute to stabilising its shareholder base, which will benefit from Vector’s expertise in technology. Vector publicly expressed its long-term commitment to the Company.
As a result of the resolutions approved by the General Meeting, two Vector representatives, Alexander R. Slusky and David L. Fishman, will sit on Technicolor’s Board immediately upon completion of the Reserved Capital Increase.
Technicolor will file a prospectus with the Autorité des marchés financiers (AMF) relating to the capital increases, describing the characteristics of the Reserved Capital Increase Reserved and Rights Issue as well as Vector’s commitments regarding governance. This transaction is also subject to the approval of relevant competition authorities.
The timetable of the transaction will be specified in the prospectus submitted to the AMF.