Vitec Group To Buy Savage Universal For Up To $57.3 Mln In Cash

The Vitec Group Plc (VTC.L), a provider of branded hardware products and software solutions to the content creation market, said on Tuesday that it agreed to acquire Savage Universal Corp., a provider of backgrounds for the professional studio photographic market, for up to $57.3 million in cash.

Stephen Bird, Group Chief Executive, commented: "A key part of the Group's strategy is to invest in businesses exposed to faster-growing segments of the content creation market. Savage gives the Group a leading position in the growing global backgrounds market, which is the largest consumables product used by professional studio photographers. This gives us more frequent contact with our customers as well as more of a regular repeat purchase revenue stream."

The transaction which is set to be completed by the end of November 2021 is expected to add to the acquirer's earnings from the fiscal 2022. In addition, the company sees its return on investment to exceed Vitec's cost of capital from the fiscal 2023 onwards.

The acquisition will be funded by a new committed acquisition facility of $53 million from the acquirer's existing banks. The total one-off financing costs will be $1.2 million and the annual interest expense of this facility will be $1.1 million at current interest rates. The term of the facility is three years, with the first repayment due on June 30, 2022.

Savage's pro forma results for the year to December 31, 2020 were $24 million in revenues, $4.7 million in EBITDA, and $3.8 million in profit before tax. The business has grown both revenues and EBITDA materially in 2021 year-to-date also. Given the timing, the acquisition is expected to have a negligible effect on Vitec's revenue and adjusted profit before tax for the fiscal 2021.

For the existing Vitec Group, pre-Savage, adjusted profit before tax for the current fiscal is now expected to be slightly above the current market consensus, despite some uncertainties, primarily around component shortages.

For comments and feedback contact: editorial@rttnews.com

Business News

Follow RTT