Black Dragon Capital to acquire Belden’s Grass Valley

The entirety of Grass Valley will be acquired by a private equity firm led by former Avid CEO Louis Hernandez, with aims to accelerate the business into a cloud-based technology leader. 

Belden announced today the signing of a definitive agreement to sell Grass Valley, the company’s live media business, to Black Dragon Capital, a private equity firm with a focus on technology investment opportunities in disrupted industries.

The transaction is expected to close in the first half of 2020, following the receipt of regulatory approvals and other closing conditions.

The news comes as Belden announced last October it would dispose of the company following a strategic portfolio review.

• Read more: Belden confirms plans to divest Grass Valley

Belden president, chief executive and chairman John Stroup said: “We believe that Black Dragon’s deep broadcast industry experience will enable Grass Valley to effectively execute its strategic plan, and we are pleased to announce this definitive agreement.

“We look forward to supporting the Black Dragon and Grass Valley teams during the transition, and we are extremely excited about the opportunities for Belden going forward as we continue our transformation.”

The transaction consideration includes an upfront cash payment of $140 million plus various forms of deferred consideration, including a $213 million five-year seller’s note, subject to adjustments for retained pension liabilities, up to $130 million in PIK interest on the seller’s note over its five-year term, and $150 million in potential earn-out payments.

The earn-out payments are based on certain performance thresholds.

At the closing of the deal, Belden will deliver the business with an agreed-upon level of cash and other working capital. As previously announced, Grass Valley’s financial results will be presented as discontinued operations in our fourth quarter and full-year 2019 financial statements.

In a statement to the press, Black Dragon founder, managing director and chief executive Louis Hernandez said: “Grass Valley has an iconic brand, track record of strong performance, superb clients and products that compete in the top tier in every category they’re in.

Black Dragon claims to take an operationally led and thesis-driven approach to making investments and working with portfolio companies. Investments are based on the firm’s significant understanding of the impact of digitisation on workflow, technology, economics and human factors driving in the digital landscape.

Black Dragon principals and advisors are engaged participants in the industries and companies in which they invest, and they work closely with the portfolio companies to create market leaders.

Hernandez, who was formerly CEO at Avid, added: “We’re excited by the opportunity Grass Valley has to lead in an industry where other heritage brands have struggled. Grass Valley’s investments in cloud-based and software as a service (SaaS) solutions are promising.

“We believe the combination of a broad product suite, a great team and the direction of the market will make Grass Valley the partner of choice as the digitisation of the space accelerates.

“While Belden won’t retain any ownership or have an impact on operations, we are pleased that they will remain a close, long-term collaborative partner, which will ensure a smooth transition.”

Grass Valley president Tim Shoulders, and his senior team will continue to lead the company, while Hernandez will become executive chairman and, along with selected Black Dragon colleagues, will work with Grass Valley leaders on strategy, execution, client relations and the accelerated expansion to a cloud-based subscription model.

Shoulders said: “We are excited about this new phase for Grass Valley. Black Dragon’s experience and vision will help us accelerate our move to cloud-based and SaaS solution product lines that will please customers seeking the most robust and flexible models for content production and delivery.

“We are delighted to be embarking on this journey with our customers and Black Dragon.”

• Read more: Interview: Tim Shoulders on Grass Valley’s future