Media editing software vendor Avid explores sale

Avid Technology Inc (AVID.O), a provider of video and audio editing software and equipment to filmmakers and recording studios, is exploring a potential sale, according to people familiar with the matter.

The Burlington, Massachusetts-based company is working with Goldman Sachs Group on the sale process and has asked for binding offers from interested parties, the sources said.

Avid’s shares jumped 18% on the news to $24.35 in Wednesday afternoon trading, giving the company a market value of about $1 billion.

The sources cautioned that no deal is certain and asked not to be identified because the matter is confidential. Spokespeople for Avid and Goldman Sachs declined to comment.

Founded in 1987, Avid provides editing software and hardware primarily to entertainment industries. Its products, which have been used in the production of blockbuster movies such as ‘Top Gun: Maverick’ and ‘Avatar: The Way of Water’, include Media Composer, MediaCentral and AirSpeed.

In its first-quarter earnings, Avid’s annual recurring revenue grew 8.1% to $228 million, while its active paid software subscriptions grew 22% year-on-year.

The company missed analysts’ expectations, however, and its shares have dropped, down almost 20% year-to-date.

Avid Chief Executive Jeffrey Rosica told analysts on the company’s earnings call that supply chain issues created “substantial and unexpected gross margin headwinds for audio hardware,” which eroded profitability.

An activist hedge fund and Avid’s largest shareholder, Impactive Capital LP, has representation on the company’s board after cutting a deal with the company in 2019. Reuters