TEWKSBURY, Mass. (Dow Jones/AP) _ Avid Technology Inc., a maker of editing systems for audio and video, said Monday it agreed to buy rival Pinnacle Systems Inc. for $462 million in cash and stock.
Under the terms of the agreement, which is expected to close this spring or summer, Avid will exchange 0.0869 of one Avid share plus $1 cash for each Pinnacle share.
That equates to 6.2 million Avid shares plus $71.3 million in cash, based on Avid's Friday closing stock price of $62.95.
The offer represents a premium of 30 percent to Pinnacle's Friday closing price of $4.97.
Shareholders of Pinnacle, based in Mountain View, Calif., will own about 15 percent of Avid after the transaction closes.
Pinnacle, which makes video-editing tools for professional and consumer markets, posted revenue of $334.8 million for the year ended June 30, 2004. The company has 888 employees.
The companies expect Pinnacle's professional products, such as the MediaStream broadcast playout server, to enhance Avid's broadcast production pipeline. Tewksbury-based Avid, which caters to the film, music and television industries, also plans to form a unit using Pinnacle's consumer-video business.
Avid said it expects the deal to dilute third-quarter pro-forma earnings, assuming a July 1 closing, but add to fourth-quarter pro forma earnings.
Wall Street, on average, expects Avid to earn 71 cents a share for the third quarter. A year ago, the company reported net income of 54 cents a share and a profit of 58 cents a share before items.
Analysts surveyed by Thomson First Call are looking for fourth-quarter earnings of 83 cents a share, compared with net income of 61 cents a share, or 64 cents a share excluding items, in the previous fourth quarter.
Avid said it expects pro forma earnings of $3.20 a share for 2006, including a contribution of 10 cents a share from the Pinnacle deal.
Wall Street expects Avid to earn $3.10 a share for 2006.