UMG sheds tech facilities

Universal, Glenayre manufacture disc deal

NEW YORK — Universal Music Group has agreed to sell its CD and DVD manufacturing and distribution facilities in North America and central Europe to Glenayre Technologies for about $122 million.

As part of the agreement, Glenayre, an Atlanta-based communications software company, will be the exclusive manufacturer and distributor for about 80% of UMG’s discs in North America and central Europe for 10 years. Glenayre will handle these operations via the Entertainment Distribution Co., which was formed independently in 2003 to acquire UMG’s manufacturing and distribution operations and will now become a division of Glenayre.

EDC will also have the opportunity to take over the rest of Universal Music Group’s manufacturing and distribution requirements as UMG’s commitments to other suppliers expire over the next three years.

Sale includes UMG’s manufacturing and distribution operation in Hanover, Germany; its manufacturing plant in Grover, N.C.; and its distribution centers in Fishers, Ind.; Reno, Nev.; and Wilkes-Barre, Pa.

At closing, skedded for May 31, Glenayre will pay $28 million for the U.S. operations and $47.3 million for the European operations. Another $40.2 million is the present value of what EDC will pay Universal Music Group as part of the 10-year supply contracts and there will be about $6.5 million in transaction costs.

Among assets included in the purchase price is $14 million in cash to comply with German regulations.