Yesterday, Harmonic announced a definitive agreement to buy privately held Omneon in a deal valued at $274 million.
Under the terms of the definitive agreement, which has been approved by the boards of both companies, Harmonic will pay $190 million in cash and issue approximately 17.1 million shares of its common stock, all of which represents a value of approximately $274 million, based on the closing price of Harmonic's common stock on Wednesday.
Once the deal passes the usual regulatory approvals and closings conditions, it’s expected to close in the third quarter of this year.
The proposed purchase will marry Harmonic’s video delivery infrastructure with Omneon’s technology for the production, management and distribution of digital media.
“This proposed combination will position Harmonic to become a global leader in video infrastructure for the digital media industry,” said Patrick Harshman, president and CEO of Harmonic. “Media companies are being driven by ever-increasing demand for video content coupled with consumers’ desire to consume video anytime and anywhere. At the same time, the dramatic growth of video delivery over broadband and wireless networks is blurring traditional boundaries between content producers and service providers.
“With our deep customer relationships with content producers and service providers, and with our market-leading technologies that span content acquisition through delivery, we believe that our combined company will be uniquely positioned to capitalize on these trends and to accelerate revenue growth.”
Omneon’s customer base includes the BBC, BSkyB, CBS, Comcast, Discovery Communications, EchoStar, NBC Universal, News Corp., Televisa, Turner Broadcasting System and Viacom.
In addition to the technology, Harmonic was also no doubt attracted to Omneon’s healthy bottom line. For the year ended Dec. 31, Omneon’s revenues were approximately $105 million, of which 67 percent were outside the United States, with no single customer representing more than 10 percent of total revenue. Omneon’s gross margin was 58 percent in 2009.
Omneon has approximately 280 employees worldwide and is headquartered in Sunnyvale, Calif., with research and development facilities in Sunnyvale and Beaverton, Ore.
Most of the Omneon executive management team is slated to join Harmonic at closing, including Lawrence Kaplan, a founder of Omneon.