Technicolor has confirmed it has held merger discussions but maintains that the talks are routine and at a “preliminary stage.”
After Reuters, citing unidentified sources, reported the France-based digital company was in merger talks, the company issued a statement responding to “press reports and market rumors.” The statement said the company “regularly reviews and evaluates strategic alternatives for its assets,” options including acquisitions, combinations or divestitures. “This is an ongoing process in keeping with management’s mission to deliver value for shareholders,” the statement said.
Technicolor emphasized that “no strategic decision or commitment has been made” and said the company will “provide no more comment on rumors.”
The company, one of the oldest names in show business, has evolved significantly in recent years amid dramatic technological change and industry consolidation. It now has both its traditional core film services unit (which handles visual effects and the production of Blu-rays and DVDs) as well as a connected homes division.
The connected homes unit was formed after Technicolor paid $600 million to acquire the set-top box operations of Cisco Systems. While connected homes are providing more than half of overall Technicolor revenue, a sale of the unit is one scenario being considered given increases in chip prices for the boxes, which are cutting into profits.
Technicolor has recently shown it is not immune to dealmaking. In March, it sold its profitable patent licensing business to U.S. wireless technology provider InterDigital for $475 million.
Shares in Technicolor, which have fallen by two-thirds in 2018 to date, are down another 16% today in trading on the Euronext.