Cinram International Inc. tentatively has agreed to acquire the optical media manufacturing business of AOL Time Warner Inc. for $1.05 billion.
The deal would include AOL Time Warner's domestic and European compact disc and digital versatile disc operations and Ivy Hill printing business. The discs are made under WEA Manufacturing Inc. and Warner Music Manufacturing Europe GmbH. Together, the AOL Time Warner operations have annual sales of about $1.1 billion.
Toronto-based Cinram already is a major maker of DVDs and cassettes. ``This transaction affords us the opportunity to benefit even further from the dramatic worldwide growth in DVD sales,'' Isidore Philosophe, Cinram founder and chief executive officer, said in a news release.
Cinram is walking a narrow line. Margins in the burgeoning optical media business have narrowed in recent years. While disc volumes have increased, the industry's key players have been forced to consolidate and trim costs severely.
The Cinram bid reportedly topped that of a group led by a top executive of a Warner Music unit.
Under pressure from shareholders, AOL Time Warner of New York sought to sell the operation to reduce debt. Cinram and AOL Time Warner expect to sign a definitive agreement within weeks and, subject to regulatory approvals, complete the transaction this fall.