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Thursday, June 20, 2002
 Deluxe poised to acquire stake in Ritek global media
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Message Text: TDB has learned that an announcement regarding a deal between media manufacturing giants Deluxe Video Services and Ritek Global Media is imminent. Insiders report that talks have been ongoing for several months between the two companies, with the intent by Deluxe to acquire an equity stake in Ritek Global Media, the North American and European DVD manufacturing division of Taiwan-based Ritek Corp., with manufacturing operations in California and Ireland. Deluxe has plants in Arkansas, Illinois and California.

Neither Ritek nor Deluxe would make an official comment on the pending acquisition, nor comment on the percentage of the equity stake Deluxe is seeking. However, well-placed sources have confirmed that such a move is imminent, likely within the next two weeks. Some were surprised an announcement had not yet been made, attributing the delay to legal details. No major roadblocks are said to exist to impede concluding the deal.

The acquisition would provide some synergies for the two companies: it would give Deluxe — which has lagged in the DVD domain — significant capacity in that format; Ritek Global Media has an estimated annual DVD manufacturing capacity of approximately 80 million discs. (Deluxe acquired a limited DVD manufacturing capability when it bought Pioneer’s DVD plant in California two years ago.) Ritek would also bring one major DVD studio deal to the venture, in the wake of its gain of the Fox International home video business last year. Deluxe would bring substantial VHS duplication capacity, as well as significant additional distribution capability.

These synergies would make a combined Deluxe/Ritek Global Media venture more attractive to film studios looking for a wide range and scale in media manufacturing and other services. It would also present a marketing perception of an enlarged global media player to the content industry, the better to compete with other mega-players as they consolidate to achieve larger scales, such as the Panasonic/Technicolor merger earlier this year.
 
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