Qumu Sells Disc Publishing Assets (Rimage) to Equus Holdings Subsidiary

Qumu Corporation and Equus Holdings, Inc. have entered into a definitive asset purchase agreement under which Qumu will sell its Rimage disc publishing assets to Redwood Acquisition, Inc., a wholly-owned subsidiary of Equus Holdings in an all cash transaction valued at $23 million, subject to certain adjustments.

The transaction resulted from a comprehensive process implemented by Qumu’s board of directors to maximize the value of the disc publishing operations for shareholders while enabling Qumu management to focus resources and time exclusively on the company’s high growth enterprise video content management software business.

The transaction is subject to certain closing conditions, including Qumu shareholder approval, and is expected to close by July 31, 2014. Equus Holdings is a Minneapolis-based company that has evolved from a custom computer manufacturer to a portfolio of technology companies primarily in the IT equipment and solutions markets. Equus has been in business for 25 years and seven years ago became 100% employee-owned through an ESOP.

“Since 2010, we have noted our focus on addressing the decline in disc publishing revenues and driving a transformation in the business. At that same time, we began investing in online file sharing technology to target the evolving technology landscape in mobility and cloud computing. As our strategic vision developed further, we recognized the opportunity for video in the enterprise and, as a result, in October 2011, acquired Qumu, Inc., a leader in the emerging enterprise video software industry,” said Sherman Black, president and CEO, Qumu.

“Qumu software’s growth has been overshadowed by the declining revenue of our disc publishing operation. As a result, beginning in 2013, our Board, with the advice of Mooreland Partners as its financial advisor, undertook an extensive review of strategic alternatives for the disc publishing operation, including continuing to run the operations as part of Qumu Corporation. Following a thorough, competitive process that included multiple potential acquirers, the board determined that it is in the best interests of our shareholders to sell the disc publishing assets to Equus Holdings. The proposed transaction is estimated to provide Qumu with approximately $19 to $20 million in net cash after closing costs, post-closing adjustments, taxes and the assumed return of the $2.3 million, 15 month escrow. Most importantly, it will enable us to concentrate our efforts and resources on the significant growth opportunity for our proprietary enterprise video software business. With a single focus on the growing software business, we have the potential to achieve improved value for our shareholders.”

“Our board believes the transaction with Equus Holdings represents the highest value alternative for Qumu shareholders. We look forward to working with the Equus team to achieve a smooth transition of the disc publishing operations following the closing of the transaction,” Black concluded.

“For the past 25 years, Equus has been a leading provider of integrated computing, managed and mobile solutions to the North American value-added reseller channel. Like Equus, Rimage has a market leadership position and a reputation of high integrity and dependability. Rimage will be operated as a wholly-owned subsidiary within the Equus organization, which will leverage Equus’ corporate structure, yet enable Rimage to remain focused and committed to delivering best in class disc publishing solutions and customer support. The Rimage operations complement our existing business and we are excited about working with their team to optimize opportunities in the marketplace once the transaction is completed,” said Andy Juang, president and CEO, Equus.

Mooreland Partners LLC acted as exclusive financial advisor to Qumu in connection with the transaction and delivered a fairness opinion to Qumu’s board of directors.

Rimage disc publishing offers digital publishing solutions to archive, distribute and protect content on CDs, DVDs and Blu-ray discs to more than 10,000 customers around the world. Key markets and applications for its products include video workflows, retail, medical imaging and law enforcement.

Read also:
Rimage Acquired Qumu in Enterprise Video Communications (November 30, 2011)
For $52 million