Israel's Orad Hi-Tec Systems Acquired by U.S. Firm Avid for $70 Million
Maker of graphics for television broadcasters bought at 40% premium to market valuation.
Orad Hi-Tec Systems, an Israeli company that provides technology for broadcasters, is being acquired by U.S.-based Avid Technology for 5.67 euros ($6) a share, in a deal valuing the company at about $70 million, the two companies said on Monday.
The deal, which will merge Orad into Avid’s newly formed Israeli subsidiary – and is expected to close by the second quarter, June 30 – valued the Israeli company at a 40% premium to its market prices on the Frankfurt Stock Exchange. In response, shares of Kfar Sava-based Orad climbed 36%, to close at 5.44 euros.
Orad makes state-of-the-art 3-D real-time graphics, video servers and related gear for the television industry, which would complement Avid’s line of digital media creation tools for film, video, audio, animation, games and broadcast professionals.
“We have followed Orad’s success in the market for many years and are excited about the prospects of what our combined companies can accomplish,” said Avid CEO Louis Hernandez, Jr.
The acquisition will lead to a significant expansion of Orad’s research and development center in Poland. While its Israeli operations will not be shuttered after the deal is completed, they will grow in line with how fast sales for the merged company increase.
Founded in 1993, Orad gradually developed a family of graphic video systems, including 3-D graphics, virtual studios and advertising used for news, channel branding, sports production and enhancement, elections and special events.
Embarrassingly for the company, Orad sold Israel’s Channel 1 Television a system for reporting exit polls for last month’s general election. But the system displayed the wrong numbers and two days later the company apologized and refunded Channel 1’s money, plus a penalty.
Nevertheless, its systems are used widely around the world. Last year, it had revenue of $40 million, a 27% increase from the year before. Net profit was $3.4 million, turning around from a loss of $1.9 million in 2013. Orad employs 250 people, 100 of them in Israel.
Avid is a much larger company, with $620 million in revenues in 2014 and net profit of $15 million.