Vantiva to acquire CommScope Home Networks

Vantiva, the home networks and set-top box provider formerly known as Technicolor, has entered into a call option agreement with CommScope to acquire the latter’s home networks division, which provides residential connectivity equipment and video set top boxes. Vantiva said that its planned acquisition of CommScope Home Networks represents a transformational transaction.

In the year to June, CommScope Home Networks and Vantiva’s Connected Home generated US$1.5 billion and €2 billion in sales respectively.

Under the terms of the deal, CommScope would take a 25% stake in Vantiva through a reserved share capital increase and a maximum cumulative earnout of US$100 million in cash contingent upon Vantiva achieving an EBITDA equal or exceeding €400m in a given fiscal year over the five years following the first full year after closing.

CommScope would also have one representative join Vantiva’s board and would commit to an 18-month lock-up period with regards to the Vantiva shares received as part of the transaction.

Under the terms of the agreement, the acquisition is subject to Vantiva’s exercise of the call option following information and consultation processes with relevant employee representative bodies.

If all necessary approvals are received, including regulatory approvals, the acquisition is expected to close at the end of the fourth quarter of this year.

“This planned strategic acquisition represents a unique transformative opportunity for Vantiva. It will enable us to reinforce Vantiva’s Connected Home operations, accelerate our innovation roadmap and expand into new markets through additional commercial partnerships. From a financial perspective, the acquisition of Home Networks will substantially increase the scale of our business while also generating synergies, which will significantly strengthen our free cash flow generation potential. This will result in a value-enhancing transaction benefiting all stakeholders, including end-consumers, customers, employees, shareholders and lenders. Subject to various approvals, we will be thrilled to welcome CommScope as a shareholder in Vantiva and our new colleagues joining us from CommScope Home Networks,” said Luis Martinez-Amago, CEO of Vantiva.

Following the acquisition, Vantiva’s plan is to fully integrate the CommScope division into its own connected home division, improving operational efficiency through increased scale. It said that the transaction is currently expected to generate in excess of €100 million in pretax cash synergies on a run-rate basis, estimated to be reached in fiscal year 2026.

The cash impact from net synergies is expected to be positive from 2025. The company said that the synergy potential would significantly improve its cash generation.

“We are excited about the strategic opportunity to sell our Home Network business to Vantiva and become a key reference shareholder in Vantiva. The combination of the two entities will create value for customers and other stakeholders and we look forward to supporting Luis and the rest of the Vantiva team in the execution of the combination and the potential value creation,” said Chuck Treadway, CEO of CommScope.

Tale of two halves

While Vantiva is expanding successfully, the other half of the former Technicolor, Technicolor Creative Studios, is doing less well.

The visual effects, motion graphics and animation services outfit is planning to delist from the Euronext Paris exchange as it tries to reshape a business hit hard by the impact of the writers and actors strikes in Hollywood, as well as a slowdown in the advertising virtual effects market.

The company posted revenues of €302.7 million for the first half, down fully 25.9% year-on-year. Adjusted EBITDA  was down by €58.9 million to a loss of €15.7 million.

The company is to receive a €30 million cash injection from existing shareholders and plans to seek further financing options from various sources to address its future liquidity needs.

CEO Caroline Parot said that the company was “facing broader industry challenges, which have been exacerbated by the historic five-month-long writers and actors strike in Hollywood and are delaying our path to recovery”.

She said that the financial injection and delisting would “allow us to accelerate the implementation of our transformation program with greater agility and help us successfully seize business opportunities as soon as the market picks up”.