Gaiam to sell media distribution business
Last Updated: 15:10 October 18, 2013
LOUISVILLE - Lifestyle media company Gaiam Inc. (Nasdaq: GAIA) announced Thursday that it has agreed to sell its nonbranded entertainment media distribution business, GVE, to Cinedigm Corp. for $51.5 million.
A press release from Louisville-based Gaiam said the sale price also includes "an adjustment for closing net working capital that is expected to total approximately $5 million to $7 million in additional cash consideration." The company will retain all of its Gaiam-branded media business.
Culver City, California-based Cinedigm (Nasdaq: CIDM) said in its own release that GVE president Bill Sondheim will become president of Cinedigm's Entertainment Group effective immediately. However, Cinedigm spokeswoman Maggie Begley said in an email that the fate of GVE's Louisville operations and the employees who work there remains to be determined.
Officials for Gaiam could not be reached Friday.
Gaiam's release said the company will focus on its two core businesses, its branded health and wellness business and Gaiam TV, the company's streaming video subscription business.
Gaiam said it will use the proceeds from the transaction to pay down debt and to "pursue organic and potential acquisition growth initiatives for the company's core businesses."
"The value we are realizing from this transaction represents a good return for our shareholders and further strengthens our balance sheet and financial flexibility," Gaiam chief executive Lynn Powers said in the release. "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."
Gaiam shares were trading at $6.34 at mid-afternoon Friday, up 74 cents from their previous close.
Gaiam reported revenue of $44.5 million and a net loss of $2.1 million for the second quarter ending June 30. Gaiam's third-quarter earnings report is expected to be released in early November.
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