Espial Group has arranged to buy Kasenna for about 4.7 million common shares. Given the value of Espial stock (it’s been trading the last three months at about $1.50), the deal is worth about $6.6 million.

Espial provides IPTV middleware and applications, while Kasenna specializes in IP video delivery, including an open standards and an intelligent management infrastructure.

“The combination of Espial and Kasenna strengthens the leadership position of Espial in the IPTV, hybrid IP-DVB and hospitality segments,” said Jaison Dolvane, CEO of Espial. “The IPTV market remains early and fragmented, and service providers are looking for clear leaders that they can bet on. Acquiring Kasenna provides us with increased scale, expertise, product breadth and channel access to position ourselves as the leading choice for service providers worldwide.”

The combination will have a footprint in more than 100 customers worldwide, with no overlap, and a combined 2.4 million IPTV licenses in deployment for one or more of the two companies’ products.

Espial said the transaction represents 51.2 percent of the issued and outstanding shares of Espial, and it will represent approximately 33.6 percent of the issued and outstanding shares of Espial on an after-issue basis.

And 200,954 of the common shares to be issued in connection with the merger will be issued to certain key officers and directors of Kasenna; 753,545 of the Espial common shares to be issued in connection with the merger, representing approximately 16.6 percent of the Espial common shares to be issued in exchange for Kasenna shares, will be placed into escrow for a period of one year following closing of the merger as security for any misrepresentations or breach of covenants by Kasenna and/or its stockholders under the Merger Agreement.

More Broadband Direct:

• DirecTV bows on-demand service 

• Taking care of businesses: Cox Business adds online backup, security in N.Va. 

• Charter boosts broadband speeds in Michigan 

• Comcast adds international plans for VoIP 

• AT&T upgrading networks in Conn., Tenn. 

• ABI: Industry-political obstacles, interoperability challenges face tru2way 

• CTAM, Nielsen research: Adult viewers still prefer TVs for viewing 

• Espial to buy Kasenna for $6.6M in stock 

• Concurrent receives notification from NASDAQ 

• UTStarcom sells another division 

• Broadband Briefs for 7/01/08