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Monday, 11 December, 2000, 10:40 GMT
Carlton sells Technicolor

Technicolor's sale had been planned to fund Carlton's acquisition of United
The UK's Carlton Communications is selling Technicolor to France's Thomson Multimedia in a cash and shares deal that values the film imaging and processing division at $2.065bn.

In a statement, the UK media group said it was taking a 5.5% stake in Thomson as part of the deal and was forming a strategic alliance with the French group covering digital and interactive television.

Lanny Raimondo, chief executive Technicolor
Raimondo: Remaining at Technicolor
Technicolor, which accounted for slightly more than 50% of Carlton's turnover, was lined up for sale in late 1999 when the UK group was eyeing a merger with former ITV rival United News & Media - which has now been taken over by Granada instead.

According to Carlton, Technicolor is the world's largest manufacturer and distributor of videocassettes, compact discs and digital versatile discs (DVDs).

Interactive TV investment

In a statement, Thomson said it saw "substantial growth opportunities with Technicolor's current and future client base, in particular in DVDs, digital cinema, digital lab and digital media chain services".

Technicolor chief executive Lanny Raimondo will remain at the head of the firm and also become a member of Thomson's executive committee, the French firm said.

Under the deal, which is subject to regulatory and shareholder approval, Thomson will pay $1.35bn in cash to Carlton, of which $600m will be paid over four years.

Technicolor (year ended 30 September)
Revenue $1.6bn
Pre-tax profit $378m
Operating profit $249m
Carlton will receive 15.5 million Thomson shares which will be released after one year.

The UK group - which owns 50% of ONdigital - also said it would invest about $15m in TAK, Thomson's interactive television joint venture with software giant Microsoft.

Earlier this month, Carlton had announced an 8% rise in pre-tax profit before digital investment and exceptionals to 342m ($497m) for the year to 30 September.

Premiership highlights acquisition

Chairman Michael Green had said that although Carlton's proposed merger with United had been effectively blocked by the Competition Commission earlier this year, the group had made progress.

"We are developing a focused television business with strong positions in free television, pay television, programme making and the digital, interactive future," he had said.

Carlton said it had helped open up the market for major sports' rights, acquiring the Football League and Worthington Cup for ONdigital and Premiership highlights for ITV.

Turnover was up 7% to 2.08bn in the year, helped by strong advertising revenue in the year as a whole.

Shares rise

Carlton and United had scrapped their merger plans, claiming regulators were putting excessively tough conditions on the deal.

United later sold its ITV interests to Granada Media, which in turn sold the HTV franchise on to Carlton to satisfy regulatory concerns.

Carlton has said it spent 11.1m on the failed merger with United and a further 4.1m preparing for the sale of Technicolor.

Carlton shares were up 28 pence or 4.9% at 605p by 0954 GMT on Monday.

Thomson shares were 3.9% higher at 54 euros in early trade in Paris.

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