SeaChange spends $12M to buy VividLogic
With cable operators getting serious about IP-delivered video, SeaChange International has strengthened its hand in that regard with today’s announcement that it will pay at least $12 million in cash for privately held VividLogic.
VividLogic provides software and services to cable operators, set-top box manufacturers and consumer electronics suppliers. Its software products roster includes tru2way, Multimedia Home Platform (MHP) and Globally Executable MHP (GEM)-based IPTV operability for set-top box and CE manufacturers, and in-home content protection, as well as funded software development for the creation of service provider-sponsored home media gateways.
The deal will not only give SeaChange more of a video over IP presence in the cable industry, but it will also give the Acton, Mass.-based company the ability to help cable operators enable home media gateways.
“VividLogic expands our software product portfolio by providing wireless gateway, tru2way and MHP capability to our in-home offerings,” said SeaChange Chairman and CEO Bill Styslinger. “Tru2way and MHP are especially important as both North American and European service providers prepare their networks for customer interactive applications. SeaChange has made great progress with its software strategy. Not only have we established ourselves as the leader in back office, advertising and application software, additionally our various in-home software products are deployed in approximately 30 million devices.”
Last year, VividLogic participated in one of CableLabs’ tru2way interoperability events , which also featured demonstrations of EBIF applications.
Under the terms of the definitive agreement, SeaChange will pay $12 million in cash upon the closing of the transaction, of which $1.2 million will be deposited in escrow with respect to specified indemnification matters.
In addition, VividLogic shareholders will be entitled to the working capital on its balance sheet prior to closing, an amount estimated to be $8.6 million. Of this $8.6 million to be paid in cash, $3.9 million will be paid at closing, $1.3 million will be paid on each of May 1 and Aug. 1 of this year, respectively, and $2 million will be paid on the one-year anniversary of the closing. VividLogic’s estimated $8.6 million of working capital at the closing includes approximately $5.9 million in cash.
SeaChange is also obligated to pay $1 million in cash to shareholders of VividLogic on each of the first three anniversary dates following the acquisition. The purchase price will also include earn out payments based on the operating performance of VividLogic over the three-year period ending Jan. 31, 2013, with payment upon achievement of these metrics occurring annually.
Freemont, Calif.-based VividLogic’s revenues are estimated to be approximately $7 million for calendar 2009, and it is expected to generate a small profit for the year.
“As the next generation of in-home devices – including wireless gateways and cable-ready televisions – emerge, it is important that we embrace these technologies to continue to lead in the in-home software markets,” Styslinger said. “In 2010, our restriction to sell TV Navigator in North America is lifted and, combined with our strong set-top software presence, we plan to offer tru2way, MHP and wireless gateway software that will enable our customers to share content and offer next-generation applications.
“We are excited about the market changes and the growth opportunities that lie ahead. VividLogic’s leadership in key areas that complement our own software offerings uniquely positions us to lead in the next generation of in-home infrastructure software, middleware and application software.”
At the International Consumer Electronics Show, the two companies are demonstrating their joint product offerings, including VividLogic’s tru2way software stack and multi-room DVR and SeaChange’s Intelligent Video Platform for place-shifting across PCs, mobile phones and television set-top boxes.
Blackstone Advisory Partners acted as the exclusive financial advisor to SeaChange for the deal.
SeaChange purchased Netherlands-based eventIs Group , which develops VOD and broadcast software, for $36.6 million.