Belden agrees to buy Thinklogical, thinks twice about proposed Digi acquisition

Belden Inc. (NYSE: BDC) has agreed to acquire one company and rescinded its offer for another. Belden has signed an agreement to acquire Thinklogical, which develops large-scale video and data distribution systems, and pulled from the table an offer to buy Digi International (NASDAQ: DGII).

Belden will acquire Thinklogical from Riverside Partners, a Boston-based private equity firm, for $160 million in cash. The company expects to complete the deal in the second quarter this year, subject to regulatory approvals and other closing conditions. Belden sees the addition of Thinklogical and its line of fiber-optic-based video and switching equipment as strengthening its Belden's Broadcast Solutions platform. The deal also will get Belden into the high-performance keyboard/video/mouse (KVM) switching hardware market.

Thinklogical generated revenues of approximately $51 million in 2016, leading to net income of $12 million and adjusted EBITDA of $17 million. Belden believes the new assets will prove accretive to GAAP and adjusted earnings per diluted share by approximately $0.04 and $0.27, respectively, in the first full year of ownership.

"We are extremely excited to welcome the talented Thinklogical team to the Belden family," said John Stroup, president, CEO, and chairman of Belden. "The business is uniquely well-positioned for success, given its numerous market growth drivers, industry-leading proprietary products, and difficult-to-obtain intelligence and defense accreditations. This is a very compelling opportunity for Belden that provides additional opportunities for profitable growth in our Broadcast Solutions platform."

The opportunity to acquire Digi, which makes wireless modules and other hardware as well as offers services for a wide variety of industries, apparently became less appealing after Digi lowered its EBITDA forecast for the year during its most recent quarterly earnings statement May 4. Belden made an unsolicited offer to buy Digi last November for $13.82 per share in cash, which translates to approximately $380 million. The company repeated the offer in December when it grew tired of waiting for Digi's board to respond.

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