Ballantyne
Strong, Inc. (NYSE MKT: BTN), a provider of digital equipment,
screens and managed services as well as specialty lighting equipment,
today announced the acquisition of Convergent Corporation and its wholly
owned subsidiary, Convergent Media Systems, a leading player in digital
signage and content creation and distribution systems. Convergent
Corporation was a subsidiary of Sony Electronics Inc.
Founded in 1980, Convergent Media Systems manages digital solutions for
customers that span over 95,000 displays spread across over 22,000
locations, which are seen by more than 10 million people per day.
Convergent Media Systems has long-standing customer relationships with
companies such as Kroger, Safeway, and Best Buy Canada. Bryan Allen will
continue to manage the Convergent Media Systems team.
The combination of Ballantyne Strong and Convergent Media Systems will
create one of the largest and best capitalized companies providing
digital technologies for out-of-home messaging, advertising and
communication (the Digital Out-of-Home or DOOH market) and Enterprise
Video Solutions (EVS), which provides enterprises with the
infrastructure necessary for communication, collaboration, training and
education of employees. In aggregate, the domestic DOOH and EVS markets
are estimated to be more than $4.0 billion annually.
“This is a transformative acquisition that extends Ballantyne’s core
expertise into adjacent markets experiencing strong growth,” said Gary
L. Cavey, President and CEO of Ballantyne Strong. “Industry analysts
expect the DOOH and EVS markets to grow at compounded annual rates of
26% and 16%, respectively, through 2015. With these markets being highly
fragmented, there is a clear opportunity for Ballantyne to capture
market share with a unique end-to-end, single source solution covering
design and development of customer solutions, system integration,
software, hardware, content creation and distribution, network
monitoring and field services. With the addition of Convergent Media
Systems’ existing customer base, we will be able to further leverage the
established infrastructure of our Network Operations Center to enhance
efficiencies within the combined company and provide a strong platform
for continued growth. Following this acquisition, we will continue to
have a very strong balance sheet, which will be a key differentiator in
the DOOH and EVS markets, and will enable us to continue investing in
growth opportunities going forward.”
Financial Highlights
Convergent Media Systems has annual revenue of approximately $40 million
and has averaged $0.7 million in EBITDA over the past three years
(2010-2012). The acquisition is an all-cash transaction valued at
approximately $16 million. Ballantyne Strong expects the transaction to
be $0.06 - $0.10 accretive to earnings per share in 2014 and $0.15 -
$0.20 accretive to earnings per share in 2015. In addition, Ballantyne
believes there are opportunities to improve working capital management
that should result in higher cash flow generated from Convergent’s
operations.
Conference Call
Ballantyne Strong will host a conference call to discuss the acquisition
announcement today, October 1, 2013 at 10:00 a.m. Eastern Time. The call
will be available via telephone at 877-941-9205 or 480-629-9771,
passcode #4643394, and through the Company’s website at www.strong-world.com
in the Investors section of the site. A replay of the call will be
available through October 8, 2013 by dialing 800-406-7325 or
303-590-3030, passcode #4643394. A webcast replay of the call will also
be available on the Company’s website approximately two hours after
broadcast.
About Ballantyne Strong, Inc. (www.strong-world.com)
Ballantyne Strong is a provider of digital equipment, screens and
managed services as well as specialty lighting equipment. The Company
supplies major and independent theater chains, top arenas, theme parks
and architectural sites around the world.
Forward-Looking Statements
Except for the historical information in this press release, it includes
forward-looking statements that involve risks and uncertainties,
including but not limited to, quarterly fluctuations in results;
customer demand for the Company’s products; the development of new
technology for alternate means of motion picture presentation; domestic
and international economic conditions; the management of growth; and
other risks detailed from time to time in the Company’s Securities and
Exchange Commission filings. Actual results may differ materially from
management’s expectations.
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