TiVo, whose name became synonymous with the act of recording live television shows, agreed to be acquired by the Rovi Corp. for about $1.1 billion, the companies announced Friday.
In acquiring TiVo, Rovi will get access to analytics about viewing habits, which are provided to advertisers and media companies. Rovi also adds 10 million TiVo-served households to its own 18 million households using television guides.
The deal was, in part, driven by Glenn W. Welling of Engaged Capital. The activist investor successfully claimed two seats on Rovi's board last year and pushed the company to consider a merger with TiVo, people briefed on those discussions said last month.
TiVo had been in the midst of searching for a new chief executive. Its chairman, Thomas S. Rogers, led the company for more than a decade before announcing in November that he was stepping down. Naveen Chopra, TiVo's chief financial officer, has been serving as interim chief executive.
The combined company, which will take the TiVo name, will be led by Thomas Carson, chief executive of Rovi.
"By working together, Rovi and TiVo will revolutionize how consumers experience media and entertainment, and at the same time build value for our stockholders," Carson said in the statement.
Rovi will pay about $10.70 per share in cash and stock, the companies said. TiVo shareholders will receive $2.75 per share in cash, and the remaining $7.95 will be paid in common stock of the combined company.
The stock component of the transaction includes an option that will accord TiVo shareholders fewer shares if Rovi's stock price goes up to a certain average price, and more shares if Rovi's stock price falls to a threshold.
The combined company will have more than 6,000 patents and pending applications. Both companies have been able to generate billions of dollars from intellectual-property licensing and awards from patent-related lawsuits.
The combined company is estimated to generate about $800 million in revenue this year. The two also say they could save about $100 million in annual costs. The transaction is subject to approvals by both sets of shareholders as well as regulators. The companies expect to close the transaction by the third quarter of this year.
Business on 04/30/2016