News

On June 17, Carlton Communications, owner of Technicolor, announced that it has entered into a merger agreement to acquire Nimbus CD International, one of the world's largest independent manufacturers of optical discs, including CD-Audio, DVD, DVD-ROM, and CD-ROM.

According to the announcement, Carlton plans to expand the business alongside Technicolor, which currently produces 650 million videocassettes and 40 million CDs a year, and which expects to triple DVD capacity to 15 million units a year.

Following the agreement, Carlton will make a cash-tender offer of $11.50 per share for all outstanding shares, valuing Nimbus at approximately $264 million.

Explaining the purpose of the merger, Michael Green, chairman of Carlton, said: "Technicolor is becoming the leading manufacturer and distributor of optical discs. Just as the company added videocassettes to its film operations in the '80s, now we are adding optical discs in the '90s. The penetration of VCRs, DVD players, and PC disc drives are all growing as part of the worldwide expansion of screen-based entertainment. Working together with Nimbus, we can serve a larger part of the growing global market."

According to Lyndon Faulkner, chairman and chief executive officer of Nimbus, "Nimbus and Technicolor are an excellent match and we look forward to working with one of the most respected names in the packaged-media industry. Nimbus has demonstrated the strength of its CD-Audio and CD-ROM capabilities. As a leader in DVD production, we believe there is great potential for rapid growth as a supplier of DVD-Video, Divx, and DVD-ROM products to the home-entertainment and computer-software industries."

DVD-ROM drives are forecast to become standard in all PCs, and independent forecasts predict sales of more than two billion DVD-ROMs in the US and Europe by 2003.

According to Nimbus, the company currently has the capacity to produce 260 million CDs per year, and recently announced its intention to increase its DVD and Divx annual capacity to 28 million units. The company recently signed a five-year agreement with Digital Video Express to replicate Divx discs.