Rovi to Acquire TiVo for $1.1 Billion

Tivo Logo Black - P 2012

Tivo Logo Black - P 2012

The company, one of the biggest owners of patents for digital entertainment devices, will take on the "iconic" TiVo name.

Digital entertainment devices patent owner Rovi Corp. has agreed acquire DVR pioneer TiVo for $1.1 billion.

Rovi said it would pay $10.70 per share in cash and stock for a total consideration of approximately $1.1 billion. "The new company combines two media and entertainment technology innovators with complementary products, services and intellectual property assets and a common mission to write the next chapter of the consumer entertainment experience," the companies said.

Rovi said it will, after the deal closes, adopt the TiVo brand as the new company name, calling it "iconic."

Rovi is one of the biggest owners of patents for digital entertainment devices, with more than 5,000 issued or pending patents worldwide. An activist investor has been pushing it to look at a deal with TiVo.

“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 Rovi CEO Tom Carson. "It’s an exciting time as the media and entertainment landscape undergoes a significant evolution. The combined capabilities of TiVo and Rovi place us in a tremendous position to extend services across platforms and to a customer base that includes traditional, over-the-top and emerging players across the globe."

He added: "By working together, Rovi and TiVo will revolutionize how consumers experience media and entertainment and at the same time build value for our stockholders.”

For 2016, the combined company is estimated to have more than $800 million in revenue. It is targeting at least $100 million in annual cost synergies. Rovi said the deal will add to its earnings per share within the first year.

The company also said the deal would create a "$3 billion entertainment technology leader." It explained the figure this way: "Both Rovi and TiVo have been successful in monetizing their innovations and intellectual property, with more than $3 billion in combined IP licensing revenues and past damage awards."

Under the deal, Rovi will pay $2.75 per share in cash, or approximately $277 million, with the rest to be paid in shares of common stock of a new holding company that will own both Rovi and TiVo. The per-share price tag represents a premium of approximately 40 percent over TiVo’s closing price of $7.66 on March 23, the day before first reports about deal talks.

The deal is expected to close in the third quarter after shareholders approve it and antitrust clearance.