Rovi is buying digital video recording pioneer TiVo for about $1.1 billion.
The San Carlos, Calif.-based entertainment technology company will pay investors $2.75 per share in cash, or about $277 million. The rest of the $7.95 per share will be paid in common stock shares of a new holding company comprised of Rovi and Tivo.
The deal is a 40% premium over TiVo’s closing price of $7.66 on March 23, the last trading day before media speculation arose into a possible acquisition.
Shares of Rovi (ROVI) were up 3.7% to $17.99 in premarket trading. TiVo (TIVO) shares closed Thursday up 2% to $9.42.
The combined company, which will take the name of TiVo, will hold more than 6,000 patents related to TV and video technology. Rovi already had more than 5,000 issued or pending patents dealing with programming guides and discovery tools for TV makers and online video providers.
Combined, Rovi and TiVo represent a $3 billion entertainment technology company, the companies said, with saving synergies of $100 million expected over the first year.
TiVo pioneered the advance of digital video recorders for pay TV, letting users record, pause and rewind programming. The latest TiVo set-top boxes include the Bolt ($299.99-up) incorporates 4K video and streaming video services, as well as a new QuickMode for watching sports and other recorded content 30% faster, and 1 Terabyte Roamio OTA ($399.99) digital video recorder for recording over-the-air TV broadcasts and accessing streaming services.
“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," said Rovi CEO Tom Carson in a statement. Carson will lead the combined company. "By working together, Rovi and TiVo will revolutionize how consumers experience media and entertainment and at the same time build value for our stockholders.”
Earlier this month, TiVo reported that its paying subscribers increased to 7 million, up 27% from January 31, 2015.
"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," TiVo Interim CEO and CFO Naveen Chopra said in a statement. Our combination creates a more influential global player with a commitment to product innovation, which will be incredibly well positioned to redefine television.”
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