Avid To Acquire M-Audio

Cash, stock deal worth more than $80M.

Tewskbury, Mass.-based Avid Technology Inc. announced today (Aug. 13) that it has entered into a definitive agreement to acquire digital audio and MIDI equipment manufacturer Midiman Inc. (which does business as M-Audio) for about $80 million in cash, plus stock and other components.

Under terms of the agreement, Irwindale, Calif.-based M-Audio will become a business unit of Avid’s Digidesign audio division, which manufactures and markets the Pro Tools digital audio workstation (DAW) platform. M-Audio will market its line of computer audio peripherals, PCI sound cards, keyboard controllers and control surfaces, microphones, speakers, and distributed software and proprietary sound libraries alongside Digidesign’s DAW products for the professional and home/hobbyist markets.

Avid -- manufacturer of digital nonlinear media creation, management and distribution products for the film, video, audio, animation, games and broadcast industries -- will pay approximately $80 million in cash, issue approximately 2 million shares of Avid common stock, and assume all outstanding M-Audio stock options. The deal also includes earn-out provisions, which would be payable to M-Audio’s equity holders based on the successful achievement of certain financial milestones.

Avid shares were trading this afternoon down more than 2% at $41.31.

Avid president/CEO David Krall says in a statement, “With this acquisition, we’re bolstering our investment in the home studio market segment, the fastest growing portion of our audio business, where we achieved roughly 40% year-over-year growth in Q2 of 2004.”

Digidesign has been successful in both the professional and -- more recently -- home recording markets. Its 001, 002, and Mbox interface products are extremely popular among home recordists and are a staple at brick-and-mortar, catalog and online retailers.

M-Audio, founded in 1988, has gained a reputation for high-quality products at entry-level cost, particularly its USB and FireWire audio interface and keyboard products. The privately held company has experienced rapid growth over the last four years.