Extreme Reach to Buy Digital Generation’s TV Business for $485 Mln

Extreme Reach, a portfolio company of Spectrum Equity, has agreed to buy the TV business of Digital Generation for $485 million cash. The deal includes Digital Generation’s advertising distribution business unit. Spectrum Equity, which invested $51 million in Extreme Reach in May 2013, has agreed to invest up to an additional $47 million to facilitate the acquisition. J.P. Morgan and SunTrust Robinson Humphrey are providing debt financing. Berenson & Co.  provided financial advice to Extreme Reach. Needham, Mass.-based Extreme Reach provides cross-media video advertising solutions that span TV, online, mobile and all other video media.

PRESS RELEASE

Needham, MA, Aug 12, 2013 –  Extreme Reach, Inc., a leading video platform for integrated TV, online and mobile advertising, announced today that it has agreed to acquire the TV business of Digital Generation, Inc. (NASDAQ:  DGIT), including its advertising distribution business unit, for $485 million in cash.  The transaction, which is subject to approval by DGIT’s shareholders, is expected to be accomplished in two contemporaneous steps:  DGIT will distribute its online business to DGIT shareholders in the form of a new publicly-traded company, and Extreme Reach will acquire the remaining DGIT business pursuant to a cash merger.

The acquisition is expected to be financed by a combination of existing cash, debt financing to be arranged by J.P. Morgan and SunTrust Robinson Humphrey, and new equity from existing investors of Extreme Reach.  Spectrum Equity, which invested $51 million in Extreme Reach in May 2013, has agreed to invest up to an additional $47 million to facilitate the acquisition.

Under the terms of the agreement, Extreme Reach has agreed to acquire all of DGIT’s TV-centric business units, (collectively called Video Fusion) including DG’s broadcast distribution and production services businesses. DGIT will no longer offer broadcast-related services and will shift its focus to its online media and services businesses, including MediaMind.

The Extreme Reach platform is a single technology platform designed to unify the management, delivery and analytics of advertising across all video media, including traditional television, online, mobile and connected TV.

The Extreme Reach platform offers great speed, high reliability, massive scalability and constant innovation.

“Our vision from day one has been to power digital video advertising.  This acquisition is a major step in that direction,” said John Roland, CEO of Extreme Reach. “Our platform is the first platform to leverage the same :30 commercial across TV, online and mobile.”

In addition to DGIT shareholder approval, the transaction is subject to various other terms and conditions, including approval under the Hart-Scott-Rodino Antitrust Improvements Act.  The transaction is expected to close in the first quarter of 2014.

Berenson & Company acted as exclusive financial advisor and Pierce Atwood LLP acted as legal advisor to Extreme Reach in the transaction.  J.P. Morgan and SunTrust Robinson Humphrey have agreed to act as joint lead arrangers and joint bookrunners for a proposed $475 million Term Loan syndication to support the acquisition.

About Extreme Reach

Extreme Reach is the leading provider of cross-media video advertising solutions that span TV, online, mobile and all other video media. The Extreme Reach video platform enables the seamless management, delivery and measurement of multi-screen advertising campaigns. The company’s cross-media video ad delivery network is the largest in the world. More than 3,000 advertisers and agencies look to Extreme Reach to connect and simplify their video advertising. The company is headquartered in Needham, Mass., with offices in New York, Chicago, Burbank, Detroit, Toronto, San Francisco, Dallas, Seattle and Louisville.