US-based tech company TiVo Corporation, which manufactures and distributes the popular TiVo-branded digital video recorder (DVR), has abandoned its plans to split into two units. The company announced this week that it will instead be merging with technology licensing company Xperi Corporation in a deal estimated to be worth $3 billion.
Under the deal, both companies' product businesses and intellectual property licenses will be merged and integrated and then split into two separate units. The IP business and the product business will then be placed under the newly combined company.
TiVo also revealed that the newly combined company will eventually be selling one of the units to a strategic buyer at a later date so that it can focus on just one particular business. The company did not clarify whether it would be selling the IP business unit or the products business unit.
According to a statement released on Thursday this week, the merged company will be called Xperi. The merged company will be based in San Jose, California and will continue to sell products and entertainment services under the TiVo brand. At the same time, the company will also be selling Xperi's HD Radio, IMAX-enhanced, and DTS products.
Once the merger is completed Xperi's current CEO, Jon Kirchner will serve as the new chief executive of the merged company. Meanwhile, Xperi's current chief financial officer, Robert Anderson, will serve the same role in the merged company. TiVo's current CEO, David Shull, will remain as a strategic investor of the merged company, which will have a new board of directors appointed by both TiVo and Xperi.
Shares of both Xperi and TiVo will be converted to shares of the merged company with a fixed ratio of 0.4555 Xperi share per existing TiVo share. This essentially equates to TiVo stockholders having a 53.5 percent stake in a new company, while Xperi stockholders will have the remaining 46.5 percent stake on a diluted basis.
Both companies existing debts will reportedly be combined and refinanced. The combined debts are estimated to be around $1.1 billion, which will be refinanced by the Royal Bank of Canada and the Bank of America.
The merger deal values both TiVo and Xperi at around $1.2 billion each. The fully diluted equity value of both companies stands at around $2.4 billion, with their enterprise value at approximately $3 billion. Together, the merged companies will hold a patent portfolio comprised of over 10,000 patents and applications. The company will also posses Xperi's extensive annual licensing business that boasts over 100 million connected TV units and partnerships with manufacturers and OEMs.
