Belden to sell Grass Valley to PE Firm Headed by Former Avid Chairman and CEO

Joe Zaller | February 4, 2020

This article is based on preliminary information. Additional details and analysis will be posted after we speak to company management later today.


Belden said today that it has reached a deal to divest Grass Valley to Black Dragon Capital, a private equity firm headed by former Avid CEO Louis Hernandez, Jr.

The financial terms of the deal are slightly opaque, making it difficult to understand how the Grass Valley business is being valued for the transaction.

On a call with investors, Belden CEO John Stroup said, “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 certain adjustments, up to $130 million in PIK (payment in-kind) interest on the seller’s note over its five-year term, and $150 million in potential earn-out payments. These earn-out payments are based on certain performance thresholds, but the seller’s note and the interest on the seller’s note are not.”

After reiterating the Grass Valley divestiture deal terms, Belden CFO Henk Derksen told analysts “roughly $353 million is not tied to performance”  and advised that “the best way to think about valuation [of the Grass Valley business] is $140 million, the $213 seller’s note is about $353 million, it’s about 1-times revenue.”

In a note to investors, SunTrust Robinson Humphrey Will Stein said the valuation of Grass Valley “isn’t straightforward,” but predicted a positive outcome for Belden saying: “we estimate the total will be ~$480m, inline with our valuation expectations for the business.”

In statement, Black Dragon Capital said “Grass Valley President, Tim Shoulders, and his senior team will continue to lead the company. 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.”

Belden said it expects the transaction to close in the first half of 2020, and that it will at that time “deliver the business [to Black Dragon Capital] with an agreed-upon level of cash and other working capital,” but did not disclose the amounts.


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Belden Announces Intent to Divest Grass Valley, Exit Media Technology Sector


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