Rovi Corporation (ROVI) (NASDAQ (NBI): ROVI) and TiVo Inc. (TIVO) (NASDAQ: TIVO) announced that Rovi will acquire TiVo for $10.70 per share in cash and stock for total consideration of approximately $1.1 billion.
The new company combines two companies with complementary products, services and intellectual property assets. TiVo is a leader in user experience and content discovery for traditional television, OTT and on-demand content into one experience across devices. Rovi’s strength lies in guides, personalization, advertising, analytics and cloud services.
Combined they serve nearly 500 service providers across the world. The deal will add more than 10 million TiVo-served households to Rovi’s current base of approximately 18 million households using Rovi guides worldwide.
The company will continue to be led by Tom Carson and upon closing of the transaction will adopt the TiVo brand as the new company name.
On a pro forma basis, for the 12 months ended December 31, 2016, the combined company is estimated to have more than $800 million in revenue after purchase accounting adjustments. The combined company is expected to realize at least $100 million in annual cost synergies, with 65 percent of these synergies recognized in the first 12 months. The expected synergies are in addition to TiVo’s targeted current year $32 million Adjusted EBITDA increase from restructuring and margin improvements.
“Rovi’s acquisition of TiVo, with its innovative products, talented team, and substantial intellectual property portfolio, strengthens Rovi’s position as a global leader in media discovery, metadata, analytics, and IP licensing,” says Tom Carson, CEO of Rovi. “It’s an exciting time as the media and entertainment landscape undergoes a significant evolution. The combined capabilities of TiVo and Rovi place us in a tremendous position to extend services across platforms and to a customer base that includes traditional, over-the-top and emerging players across the globe. By working together, Rovi and TiVo will revolutionize how consumers experience media and entertainment and at the same time build value for our stockholders.”
“We’re proud of TiVo’s strong innovation history and of the ongoing efforts of our team to provide best-in-class products for our loyal consumer and service provider customers,” says Naveen Chopra, Interim CEO and CFO of TiVo. “This transaction is the culmination of those efforts and the logical next step for TiVo. In joining forces with Rovi, our customers, employees and stockholders will benefit from being part of a more diversified industry leader with significantly greater market opportunities. Our combination creates a more influential global player with a commitment to product innovation, which will be incredibly well positioned to redefine television.”
The two companies have invested over $1.5 billion in R&D over the past 10 years and have worldwide portfolios of over 6,000 issued patents and pending applications.
Rovi will pay $10.70 per share in cash and stock, approximately $1.1 billion in aggregate consideration. It will also pay $2.75 per share in cash, or approximately $277 million, subject to adjustment. The offer represents a premium of approximately 40 percent over TiVo’s closing price of $7.66 on March 23, 2016.