TELECOMMUNICATIONS company Superloop (ASX:SLC) has diversified into broadcast media, after acquiring CINENET Systems for $3 million.
Established in 2003, CINENET has built a specialised high-speed broadband data network aimed at the broadcast media industry.
The network is used by movie studios, movie producers, editing facilities, visual effects providers, sound facilities and DVD producers to create and exchange large digital assets and connect to infrastructure providers.
Media businesses in Brisbane, Sydney, Melbourne and Adelaide are interconnected through CINENET's point of presence in Los Angeles.
Superloop CEO Daniel Abrahams says the acquisition will allow the company to tap into the media industry, as well as the US market.
"The acquisition of CINENET provides Superloop an opportunity for the company to quickly expand its network capabilities into the fast-growing digital media vertical which is currently experiencing massive growth," Abrahams says.
"Furthermore the CINENET acquisition brings a great portfolio of customers and establishes an international gateway for Superloop and our customers in the United States."
Superloop chairman Bevan Slattery (pictured) says with CINENET specialising in screen media, the acquisition was an attractive opportunity to enter a new market.
"Digital media is one of the key growth industry verticals that Superloop has identified for opportunity given the massive growth in video consumption," Slattery says.
The deal consists of $1.5 million from cash reserves and $1.5 million in Superloop scrip issued at the average price for the 30 trading days leading up to November 20.
CINENET CEO and executive director Tony Clark will join the Superloop board as a non-executive director.
"Joining the Superloop group allows CINENET to continue to provide services to our existing customers, with the ability to access increased network and data centre coverage across the Asia-Pacific region and is looking forward to playing an ongoing role in driving the strategic future of the Superloop Group," Clark says.
CINENET has assisted with productions including The Great Gatsby, Batman Begins, X-Men Origins: Wolverine and the Harry Potter series.
The company is earnings and cash flow positive with established clients and recurring revenue streams forecast to reach $2 million this financial year.
The transaction is expected to be finalised on November 30.
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