Audinate Group, the developer of the professional AV-industry media networking solutions, announced that it will acquire the video business of Silex Insight SA, based in Belgium. Silex produces video networking products for manufacturers of AV equipment.
Audinate told shareholders that the acquisition of the Silex is strategically compelling because it complements the company’s existing video capabilities in Cambridge UK and aligns with their strategic vision for video over IP. In particular, the transaction will increase video FPGA expertise, enable acceleration of its video product roadmap, and cement critical mass for video engineering in Europe.
The acquisition will include an existing team of 8 engineers with long tenures and an existing revenue base of approximately US$2.5 million from a range of products including video codec IP Cores, Viper Board, Video ASSP and design services. In addition, Audinate will acquire the intellectual property related to the video business, as well as the three video compression technologies.
The acquisition consideration comprises an up-front cash payment of US$6.5 million, representing approximately 2.3 times the expected revenue for FY2021. In addition, a revenue earn-out of up to US$1.5 million may be payable based on the uplift in revenue for the twelve-month period from the acquisition date. All of which is payable in cash and will be funded from existing cash reserves.
Audinate noted that the transaction reflects the challenging supply chain environment which has currently impacted the Silex video business, like most of the AV industry. Component shortages are expected to curtail revenue for the first half of the calendar year 2022, albeit a strong order book is ultimately expected to translate into revenue as supply chain pressures ease. The proposed transaction is expected to complete on 31 January 2022.
Since raising additional capital in the middle of last year, the company has executed two deals to add video expertise to the business and accelerate its video strategy. Audinate said it will provide an update on the transaction post close with the release of its half-year results in February 2022.
Audinate Co-founder and CEO Aidan Williams commented: “We are very excited to acquire a team with widely recognised video hardware expertise and an existing revenue base. The video codecs and deep product expertise in the team, in combination with our Dante networking technology, will enable us to go to market with a variety of full-service video offerings. This acquisition complements the video software skills in the Cambridge (UK) team we established earlier in the year. Together these two deals significantly enhance our video capabilities and know-how – outcomes that have been achieved in only twelve months, notwithstanding the challenges presented by COVID.”