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Thomson buys GVG - Broadcasting & Cable

Thomson buys GVG

The $172M deal is expected to close in first half of 2002
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The French electronics manufacturer Thomson Multimedia will acquire the Grass Valley Group for $172 million in cash, pending regulatory approval, in the first half of 2002.

The deal is Thomson's second major acquisition in two years. Last December, the company purchased the Philips Professional Broadcast Group. That deal expanded the Thomson portfolio to include cameras, routing switchers, production switchers and servers. The deal with Grass Valley Group expands Thomson's product line in several areas, primarily servers and switchers.

"There is some overlap but not as much as one would think," says Tim Thorsteinson, GVG president and CEO. "There is some in the production switchers and in the high-end router line. But we haven't had definitive conversations about product roadmaps."

Thorsteinson said no decisions have been made concerning GVG's operations in Nevada City, Calif., and its employees.

The upside of the deal for Thomson is that it will give the company greater presence in the U.S. market. The acquisition of Philips last year was a first step in that direction. Bringing in GVG gives the company a brand that many broadcast professionals in the U.S. have grown up with (particularly the company's production- switcher lineup). It also gives Thomson a video-server line that, according to a recent Frost & Sullivan report, accounted for 43.3% of the industry's compressed-video–server sales this year.

"We were heading toward a stronger relationship with video-content providers," says Mark Valentin, Thomson Broadcast Solutions vice president. "The second step is the acquisition of GVG, which represents a broadening and a new step with having a stronger relationship with customers."

"Conversely, they have a strong reputation in Europe," say Thorsteinson, "and that has been a hard market for us to crack because, in places like Germany, you have to have infrastructure, service and things that we don't have. It's a struggle to be a global company today when we're a $180 million company that spends 20% on R&D and offers support and service. The combining of the business gives us the resources to better serve the customer base and take it to new markets like streaming and digital cinema."

For all the current murkiness, one thing is clear: There will be a GVG booth at NAB in April. "And we all know how much we love trade shows," says Thorsteinson.

With 73,000 employees in 30 countries, Thomson makes a broad line of consumer and professional electronic products. It reported revenue of $8.3 billion in 2000.

The deal is subject to approval by either the Justice Department or Federal Trade Commission in the U.S. and by the European Union.

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