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Cinedigm Jumps 16% After Acquisition of Gaiam Home-Video Unit

Oct. 18 (Bloomberg) -- Cinedigm Corp., a Los Angeles-based film distributor, jumped 16 percent after announcing the acquisition of a film and television library yesterday.

The company is purchasing the home-entertainment division of Gaiam Inc. for $51.5 million. The deal is expected to add more than $15 million in annual earnings before interest, taxes, depreciation and amortization, Cinedigm said in a statement.

“It’s one of those rare acquisitions that works on every level,” Cinedigm Chairman and Chief Executive Officer Chris McGurk said in a telephone interview. “We’re seeing the street react to that.” Gaiam has “distribution rights to a huge library, the WWE in DVD and digital, the NFL, Discovery Networks. It’s real high-quality content that really adds to our library.”

The combined business will have more than 32,000 film titles and television episodes in its library and $320 million in annual retail sales, according to the statement.

Cinedigm will finance the purchase through a combination of borrowings and the sale of as much as $13 million in new shares.

The stock rose 24 cents to $1.77 at the New York close. The shares are up 26 percent this year.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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