After discussions with a special committee of Orchard directors, Dimensional upped its offer to $1.84 - a 75.2% premium over The Orchard's Friday closing price.
In a related move, Dimensional's Danny Stein resigned as interim CEO of The Orchard, and the board appointed Brad Navin, the current EVP and General Manager, as interim CEO. Former CEO Greg Scholl left The Orchard last month for an executive position at NBC.
Despite moves like the acquisition of TVT to diversify its position, The Orchard is at its core a digital music distributor - a business model that is facing constant downward price pressure. It's two largest competitors, IODA and INgrooves, have entered into extensive partnerships with Sony and Universal respectively. Though an investment by Sony has been rumored, this leaves The Orchard standing alone trying to compete in an increasingly difficult environment.
The end game for owners Dimensional Associates has always been the sale of both its music properties, The Orchard and eMusic, at a profit. But meltdowns in both the music sector and the greater economy have made that impossible.
Now with the stock near a 52 week low, the savvy investors at Dimensional are gambling that a turnaround is near and that the moves necessary to improve The Orchard's position and ultimately make it ready for sale are best made without the prying eyes of outside stockholders of the SEC.
