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Technicolor backs J.P. Morgan over Vector proposal

by Andrew Bulkeley  |  Published May 30, 2012 at 9:25 AM
technicolor23.jpgSan Francisco technology investor Vector Capital Corp. may have made the higher offer for France's Technicolor SA, but the target's board said Wednesday, May 30, it would rather team up with J.P. Morgan Chase & Co.

J.P. Morgan and Vector are vying to lead a two-step proposal that will land them up to just under 30% and the right to influence the Paris-based film production equipment maker.

Both offered to first buy shares equivalent to 17.5% of Technicolor's enlarged capital, with Vector proposing to pay €1.90 per share and J.P. Morgan €1.60. Both then guaranteed to take as much as 75% of a second capital increase at €1.56 per share. Existing shareholders could also participate in the second rights issue.

Vector's proposal would give Technicolor gross proceeds of €186 million ($231 million) and J.P. Morgan's €158 million. After a board meeting the target said it still preferred the agreed J.P. Morgan deal over Vector's unsolicited offer.

"Technicolor will benefit from its association with J.P. Morgan Chase & Co., its global brand, its experience and industry expertise," the board said.

Technicolor, formerly known as Thomson SA, would use the cash to pay down debt and invest in new products after emerging from bankruptcy in 2010. The company said it had been in talks with both companies before it picked J.P. Morgan and said it would still present Vector's proposal to shareholders at its June 20 general meeting.

Technicolor said Vector's offer was too vague.

"Vector expressed support for the company's strategy as defined in its Amplify 2015 strategic plan without specifying," Technicolor said in a statement.

Technicolor shares were trading down €0.03, or 1.6%, at €1.50 by late morning in Paris. It has a market value of €335.6 million.
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Tags: Alex Slusky | Amplify 2015 strategic plan | film and video production equipment | J.P. Morgan Chase & Co. | Lazard | private equity | Technicolor SA | Thomson SA | Vector Capital Corp.

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