Gaiam, Inc. has entered into a definitive agreement to sell its non-branded entertainment media distribution business to Cinedigm Corp. for $51.5 million in a deal that will enable it to focus on building it Gaiam branded media and fitness products, which includes yoga apparel, equipment and accessories.
The transaction is expected to be consummated next week, subject to the satisfaction of customary closing conditions. Gaiam will retains all its Gaiam branded media business.
Following the consummation of the transaction, Gaiam will focus on its two core businesses, the company’s branded health and wellness business, including Gaiam branded fitness media content and products, which have a presence in over 40,000 retail doors, as well as the company’s branded e-commerce platform, and on Gaiam TV, the company’s streaming video subscription business. Gaiam TV currently provides over 5,000 exclusive video titles, including films, documentaries and original programming dedicated to conscious media, personal growth, and spirituality, and has the world’s largest online library of yoga, fitness, and wellness videos.
Gaiam intends to utilize the proceeds from the transaction to fully pay down the outstanding borrowings under its existing credit facility, which are estimated to be approximately $10 million net of related cash inflows between the transaction signing and consummation dates, and to pursue organic and potential acquisition growth initiatives for the company’s core businesses. The company does not expect to pay taxes on the sale, as it intends to utilize a portion of its net operating loss carry forwards to fully offset any income tax gain.
“Monetizing the value of our non-branded entertainment media distribution business reflects our strategic emphasis on pursuing growth in our core health and wellness and Gaiam TV businesses,” said Gaiam CEO Lynn Powers. “Since combining Vivendi Entertainment with our existing entertainment media distribution operations in March 2012, we have achieved our goal of growing GVE to become the leading independent – and second largest overall – distributor of non-theatrical content in the U.S. by bringing added scale and operational synergies to the business, making GVE a more unique, valuable and attractive asset. The value we are realizing from this transaction represents a good return for our shareholders and further strengthens our balance sheet and financial flexibility. Our strong financial profile and targeted business focus favorably positions the company to invest its management and financial resources to achieve growth both organically and through acquisitions within our core operations.”
Berenson & Company served as a financial advisor to Gaiam in connection with the transaction.
