KIT Digital buys Brickbox for $10M

Brickbox is added to KIT's spending spree

KIT Digital announced Friday morning that it has acquired privately-held Brickbox Digital Media, a provider of digital video asset management solutions based out of Prague, Czech Republic.  The details of the transaction included $10.1 million in upfront consideration, with $6.6 million in cash and the rest in 339,476 shares of KIT Digital’s common stock.  NASDAQ-listed KIT has also agreed to pay Brickbox shareholders consideration equal to 10% of forward revenues from Brickbox over a four-year period, subject to a $20 million annual revenue threshold for each year and certain profitability thresholds.

Founded in 2000, Brickbox has established its presence in Europe as an intermediary between digital video content owners and distributors, offering solutions across the gamut of the content management lifecycle, with services such as mezzanine file management, localization, digital cinema mastering, and authoring of media for replication.  Clients include Arrow Films, Eagle Rock Entertainment, Momentum Pictures, 20^th Century Fox Entertainment, Warner Home Video, and Universal Studios.

While Brickbox operates primarily out of its Prague headquarters, it also has offices in Sofia, Bulgaria, Los Angeles, London, and several other locations throughout Central and Eastern Europe.  Brickbox and its affiliates derive some $12 million in annual revenues, $1 million of which is estimated to be standalone profit.

The transaction comes as one of a number of acquisitions that KIT Digital has been pursuring as of late, including its May acquisition of Benchmark Broadcast Systems, based in Singapore, for approximately $10 million.  The details of that transaction included $9.5 million paid directly to Benchmark, in exchange for consideration of 100% of Benchmark’s shares, and an additional $1.1 million paid to Benchmark employees over the next two years.  Benchmark currently serves more than 12 countries and expects to generate revenue in the $10 million range over the next year.

Prior to that, KIT bought its privately-held rival Multicast Media for $18 million, consisting of $4.9 million in cash, 1.3 million shares of KIT Digital, and the assumption of some $4.6 million in long-term liabilities. Multicast, which specializes in live event broadcasting, Internet video management, and targeted multimedia communications for approximately 1,000 companies, is estimated to derive over $12 million in revenues.

So why has Brickbox been added to the list?

“For the last two decades, the Czech Republic has become a global knowledge center for audio-visual engineering, with a history of production, post-production, graphics and special effects work with major studios,” said Kaleil Isaza Tuzman, Chairman and CEO of KIT Digital, in the company’s press release.  “In many respects, the acquisition of Brickbox Digital Media completes the circle on our decision in early 2009 to move our corporate headquarters to Prague, and underlines our commitment to building a global leader from the heart of Central Europe.”

Founded in 1998, KIT raised $20 million in funding from KCP Capital and in March closed a $15 million equity offering.

Image source: brickboxdigitalmedia.co.uk