Avid Technology Agrees To $1.4B Acquisition Deal, Posts Q2 Earnings Beat

Avid Technology Inc AVID inked a deal with an affiliate of STG to be acquired in an all-cash transaction worth around $1.4 billion (including AVID's debt).

As per the terms, AVID shareholders will receive $27.05 in cash for each common share. The cash purchase price represents a premium of 32.1% over the closing share price as on May 23, 2023, the last full trading day before media speculation regarding a potential sale deal.

The acquisition deal is expected to close in Q4 2023, subject to AVID's stockholder approval, regulatory approvals and other customary closing conditions.

"STG's expertise in the technology sector and significant financial and strategic resources will help accelerate the achievement of our strategic vision, building on the momentum of our successful transformation achieved over the past several years. This transaction represents the start of an exciting new chapter for Avid, our customers, our partners, and our team members and is a testament to the importance of Avid and our solutions in powering the media and entertainment industry," said Jeff Rosica, CEO and President.

In a separate announcement, AVID reported Q2 FY23 revenues of $108.5 million (+11.1% Y/Y), beating the consensus of $103.5 million, and adjusted EPS of $0.22 above the street view of $0.21. 

Revenue benefited from strong growth in enterprise subscription revenue. As of June 30, 2023, active Paid Software Subscriptions reached around 544,400 (+20.9% Y/Y), Subscription ARR was $154 million (+27.0% Y/Y), and total ARR was $248 million (+7.1% Y/Y). 

Adjusted EBITDA increased 2.4% Y/Y to $16.9 million, with a margin of 15.5% (-140 basis points Y/Y).

As of quarter end, cash and equivalents stood at $34.4 million. 

In light of the acquisition deal with STG, Avid withdrew the 2023 guidance provided on May 4, 2023, and canceled the previously scheduled conference call.

Price Action: AVID shares closed lower by 1.45% at $26.55 on Wednesday.