Rovi Corp. To Buy TiVo In $1.1 Bln Deal

(RTTNews) - Rovi Corp.(ROVI), which provides on-screen guides for pay-TV listings, said Friday that it agreed to buy digital-video recording pioneer TiVo Inc.(TIVO) for $10.70 per share in cash and stock for total consideration of approximately $1.1 billion.

Rovi will pay $2.75 per share in cash, or approximately $277 million, subject to adjustment as described under the collar mechanism. The remainder, $7.95 per share, will be paid in shares of common stock of a new holding company that will own both Rovi and TiVo.

Rovi stockholders will own one share of the new holding company for each share of Rovi common stock owned as of the closing.

The Offer represents a premium of approximately 40 percent over TiVo's closing price of $7.66 on March 23, 2016, the last trading day prior to media speculation about a possible transaction.

The Cash consideration will be financed from cash on hand in the combined company, and the combined company is expected to have $150 - $270 million on hand at closing.

The Board of Directors of the combined company will include participation from TiVo's current Board.

The company will continue to be led by Tom Carson and upon closing of the transaction will adopt the iconic TiVo brand as the new company name.

"Rovi's acquisition of TiVo, with its innovative products, talented team, and substantial intellectual property portfolio, strengthens Rovi's position as a global leader in media discovery, metadata, analytics, and IP licensing," said Tom Carson, CEO of Rovi.

On a pro forma basis, for the twelve months ended December 31, 2016, the combined company is estimated to have more than $800 million in revenue after purchase accounting adjustments.

The combined company is expected to realize at least $100 million in annual cost synergies, with 65 percent of these synergies recognized in the first 12 months.

The expected synergies are in addition to TiVo's targeted current year $32 million Adjusted EBITDA increase from restructuring and margin improvements.

The transaction is expected to be accretive to Rovi's Non-GAAP EPS within the first 12 months post-close.

The boards of both companies have approved the transaction. The transaction is subject to customary closing conditions, including approval by TiVo's and Rovi's stockholders at special meetings to be held in connection with the transaction as well as clearance under the Hart-Scott-Rodino Antitrust Improvements Act.

The companies believe that they will be able to obtain the requisite clearances on a timely basis and the transaction is expected to close in third-quarter of 2016.