Aug 12 (Reuters) - Digital Generation Inc (DG) agreed to sell its television business for $485 million to Extreme Reach Inc, a year after Reuters reported that the advertising distribution company had rejected a takeover bid by its rival.
The proceeds from the sale will be used by DG to pay off all outstanding debt and fund the majority of a planned cash distribution to stockholders of at least $3 per share, the company said in a statement.
DG’s online business is not part of the deal and the stockholders will receive shares of a company that will hold its online business.
The new online company will emerge with almost all of DG’s working capital. Total working capital for the television business alone at June 30 was about $40 million, the company said.
Reuters reported in June last year that DG had rejected a takeover bid from Extreme Reach of more than $20 per share.
The company on Monday did not specify the per-share price of the deal.
“By concentrating exclusively on the digital market, the new online company can be laser-focused on meeting the challenges facing marketers due to the massive fragmentation of technologies and audiences,” Chief Executive Neil Nguyen said.
BofA Merrill Lynch acted as financial advisor to DG in connection with the transaction. Latham & Watkins LLP acted as legal advisor to DG on the transaction.
Irving, Texas-based DG helps advertisers engage with consumers across television and online media, while delivering ad campaigns.