Cinedigm Corp. (CIDM:US), a Los Angeles-based film distributor, jumped 16 percent after announcing the acquisition of a film and television library yesterday.
The company is purchasing the home-entertainment division of Gaiam Inc. (GAIA:US) for $51.5 million. The deal is expected to add more than $15 million in annual earnings before interest, taxes, depreciation and amortization, Cinedigm said in a statement.
“It’s one of those rare acquisitions that works on every level,” Cinedigm Chairman and Chief Executive Officer Chris McGurk said in a telephone interview. “We’re seeing the street react to that.” Gaiam has “distribution rights to a huge library, the WWE in DVD and digital, the NFL, Discovery Networks. It’s real high-quality content that really adds to our library.”
The combined business will have more than 32,000 film titles and television episodes in its library and $320 million in annual retail sales, according to the statement.
Cinedigm will finance the purchase through a combination of borrowings and the sale of as much as $13 million in new shares.
The stock rose 24 cents to $1.77 at the New York close. The shares are up 26 percent this year.
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