DG Systems Completes Merger with FastChannel Network
31 Mai 2006 - 11:43PM
Business Wire
DG Systems, Inc. (Nasdaq: DGIT): -- Merged Company Renamed DG
FastChannel -- Creates Advertising and Digital Media Distribution
Services Industry Leader with Unrivalled Network Footprint -- $2
Million of Operational/Cost Synergies Already Have Been Implemented
DG Systems, Inc. (Nasdaq: DGIT), the leading provider of digital
media distribution services to the advertising and broadcast
industries, announced today that its merger with privately-held
FastChannel Network, Inc. was completed. The merger is valued at
approximately $37.5 million, inclusive of approximately $8.5
million of FastChannel debt. The new company will be known as "DG
FastChannel" and trade under the symbol "DGITD" on the Nasdaq
National market; the Company's stock symbol will revert to "DGIT"
on June 27, 2006. DG FastChannel provides integrated digital
advertising services to thousands of advertisers, agencies,
newspaper publishers and television and radio broadcasters. These
services include: advertising distribution capabilities for
television, radio, and print; online business intelligence
offerings and searchable database of television advertisements;
digital asset management tools for archiving and collaboration; and
media intelligence offerings, which include broadcast verification.
On a combined basis, DG FastChannel generated 2005 revenue of $83.3
million. DG FastChannel presents the advertising industry with a
best of breed, unified service platform with unparalleled
capabilities combined with the industry's only network capable of
handling complex, sizable HD spots to virtually every relevant
media outlet. The combined company's digital delivery network has
unequaled reach in the United States and Canada including nearly
100% of all television stations, television and cable networks,
cable systems and radio stations. The Company's media network also
includes nearly 7,000 newspapers across North America and enables
online distribution of print advertising. In addition, the combined
entity offers multiple redundant digital pathways featuring both
satellite and Internet delivery. Commenting on the merger, Scott K.
Ginsburg, Chairman and CEO of DG FastChannel said, "DG FastChannel
brings together two entities with significant advertising and
broadcast industry knowledge and a suite of innovative service
offerings and technologies. The merger creates an industry leading
digital media service firm with an expanded market reach, a marquee
customer base, a robust pipeline of new product offerings, and
strong national network penetration. The ongoing commitment of the
DG FastChannel team is to provide an excellent customer experience.
Our personnel, next-generation technologies and service offerings
have positioned us to achieve this goal with each client
interaction." Reflecting the one-for-ten reverse split of DG
System's common stock effected yesterday, all outstanding shares of
FastChannel common and preferred stock were exchanged for an
aggregate 5,206,271 shares of DG Systems' common stock. The total
number of outstanding common shares of DG FastChannel is
12,628,211. Mr. Ginsburg continued, "Beyond our improved market
position and industry reach, the merger creates significant
opportunities to extract operational and cost synergies which
should allow DG FastChannel to produce higher returns than either
company could generate independently. We have actively identified
cost reductions across both organizations in parallel with the
merger process to fulfill our goal of offering customers an
advanced, cost-effective means of managing their advertising
business and assets." Update on Operational/Cost Synergies DG
FastChannel expects to achieve approximately $6 million to $9
million in operational synergies by the end of the first full year
of combined operations. The synergies are to be realized through
the integration of each company's management, personnel,
operations, products and facilities and the elimination of
duplicative offices, equipment and resources. Since executing the
definitive merger agreement in December 2005, operating expenses at
DG FastChannel have been reduced by $2 million on an annual basis,
principally through personnel reductions. The combined company
anticipates greater potential for revenue growth and believes that,
given the fixed cost nature of the business, the economies of scale
provided through the merger will enable DG FastChannel to achieve
higher operating margins (before one-time restructuring costs) than
either company would achieve independently. The Company expects to
record one-time restructuring costs in the second and third
quarters of 2006 ending June 30, and September 30, respectively.
Board of Director Changes Pursuant to the merger agreement,
effective immediately, Lisa C. Gallagher and William Donner have
been appointed to the DG Systems, Inc. Board of Directors and Cappy
R. McGarr has resigned from the DG Systems' Board. As a result, the
DG FastChannel Board of Directors has been expanded to seven
members five of whom are considered "independent" according to the
corporate governance rules of the Nasdaq Stock Market. Lisa C.
Gallagher, formerly Chairman of the Board of Directors of
FastChannel Network, is currently the Senior Vice President and
Chief Operating Officer of Hawtan Leathers, a privately held
manufacturer of specialty leathers for the garment industry. She
previously spent over 20 years as a commercial and investment
banker specializing in media transactions and Internet/Media
Convergence at investment banking firms including Bank of Boston
and Robertson Stephens. Bill Donner, formerly a FastChannel Network
Board member, is currently CEO of MedCommons, a Personal Health
Record storage and transport company. Bill Donner's career has
focused on designing, building, financing and promoting the
development of large scale online transaction processing systems
for large user communities. After a obtaining a BSEE from MIT, he
joined Digital Equipment Corporation and in the early 1980 he
formed Precision Business Systems, a Wall St. based Systems
Integrator which was sold to the Bank of America. He joined the
Greenhouse Group, Reuters' corporate venture capital arm, in 1996.
In 1999, he joined Fenway Partners, a leading NY Private Equity
Fund where he led the technology investment group. About DG
FastChannel DG FastChannel provides innovative, technology-based
solutions to help advertisers and agencies work faster, smarter and
more competitively. DG FastChannel delivers the standard in Digital
Media services to the advertising, broadcast and publishing
industries. The company utilizes satellite and Internet
transmission technologies and has deployed a suite of digital media
intelligence and asset management tools designed specifically for
the advertising industry, including creative and production
resources, broadcast verification, and digital asset management.
The Company has an online media distribution network used by more
than 5,000 advertisers and agencies, and over 21,000 online radio,
television, cable, network and print publishing destinations. For
more information visit www.dgsystems.com, www.fastchannel.com or
www.DGFastChannel.com. Forward-Looking Statements This release
contains forward-looking statements relating to the Company,
including the expansion of its digital distribution network, and
the demand among certain clients for digital audio and video
delivery services. These forward-looking statements involve risks
and uncertainties, which could cause actual results to differ
materially from those projected. These and other risks relating to
DG Systems' business are set forth in the Company's Form 10-K filed
with the Securities and Exchange Commission on March 28, 2006. DG
Systems assumes no obligation to publicly update or revise any
forward-looking statements.
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