Belden confirms plans to divest Grass Valley

Belden has announced its plans to sell live media business Grass Valley and carry out  a major cost reduction plan in a bid to save $40 million annually.

In a statement to the press, the company said the decision to pursue the divestiture of Grass Valley was “based on the approval of Belden’s Board of Directors to divest this business and the probability that such divestiture will be consummated.”

The news was confirmed today during the firm’s fiscal third-quarter 2019 results where the revenues for the quarter totalled $620.3 million, a decrease in $35.5 million compared to the same time last year. It follows a major strategic review at the company.

Belden president, chief executive and chairman John Stroup said: “Revenues were near the midpoint of our expected range excluding Grass Valley. Consistent with our expectations, demand trends remained softer in some of our key Industrial markets in the third quarter, but we are encouraged by the improving trends in our Broadband business.”

The divestiture of Grass Valley provides an opportunity for a broad-based organisational recalibration.

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As a result, the company announced a cost reduction program that is designed to improve performance and enhance margins, delivering a $40 million annualised reduction in selling, general, and administrative expenses.

The company intends to deliver improvements by streamlining the organisational structure and investing in technology to drive productivity.

These actions will begin immediately, with some benefit in 2020, and the full benefit in 2021.

Belden stated it will immediately begin report Grass Valley as a “discounted operation” on its income statement, however, stressed it “does not, in any way, imply Grass Valley is going out of business.”

The term “discontinued operation” is a standard accounting term used when a corporation decides to exit a portion of its overall business. It is a way to differentiate such a portion of the business from other “continuing operations.”

Stroup added: “We completed a rigorous strategic review of our portfolio of businesses and today’s announcement marks an important outcome. We concluded that it is in the best interests of our shareholders, customers, and employees to separate Grass Valley from Belden.

This will enable Grass Valley to more effectively execute its strategic plan and pursue growth opportunities. Further, this separation will simplify Belden’s portfolio and improve organic growth and revenue visibility.”

The remaining Belden portfolio will include a tighter portfolio of businesses “while smaller, offers improved predictability and multiple platforms for accelerating organic growth and margin expansion,” Stroup said.

The Company expects fourth quarter 2019 revenues to be $510 - $530 million. For the full year ending December 31, 2019, the Company now expects revenues to be $2.092 - $2.112 billion.

Last year, Belden completed its acquisition of SAM (Snell Advanced Media), which it merged with Grass Valley.

• Read more: Belden to merge SAM with Grass Valley