Sonic Solutions and DivX, both listed on Nasdaq, this morning announced that they are to become one. Under the terms of the agreement, Sonic would acquire all the outstanding shares of DivX and merge DivX operations into those of Sonic.
DivX stockholders would receive a combination of cash and stock equal to $3.75 in cash and 0.514 shares of Sonic common stock for each share of DivX they hold. The offer was worth $9.83 a share at Tuesday’s closing price, or around $323 million in total.
The price is a 41% premium to Tuesday’s closing price for DivX shares.
Sonic says the purchase could potentially double fiscal year 2012 earnings per share on a non-GAAP basis. Following completion of the merger, DivX stockholders will own approximately 35% of the combined company’s capital stock.
The acquisition is expected to close in September 2010.
Here’s how Sonic pitches the buy to shareholders and the press:
For more than 20 years, Sonic has been the leader in developing technologies for the preparation and delivery of entertainment content in popular formats — CD, DVD, Blu-ray Disc and most recently Internet delivery of video.
The acquisition of DivX is expected to advance Sonic’s mission to deliver technology that makes it easy and convenient for retailers, online services, Hollywood studios, and manufacturers of CE and mobile devices to distribute premium digital video content over the Internet. DivX is expected to enable Sonic to deepen and broaden the technology it offers for Internet-based video delivery and expand its relationships with leading retailers and consumer electronics manufacturers.
DivX technology is said to reside on over 300 million devices, including over 8,500 models of digital televisions, DVD and Blu-ray Disc players, and over 80 different mobile handsets. The DivX web properties get visited by more than 12 million unique users on a monthly basis, combined, according to the release.
The current Sonic management team will lead the combined company, augmented with key managers and executives from DivX. Kevin Hell, DivX’s CEO, Dan Halvorson, DivX’s CFO and David Richter, DivX’s executive vice president, business & legal affairs and general counsel, will be leaving the combined company after the transaction is closed.
Sonic Solutions was a digital media software provider which developed popular applications and technologies for digital entertainment. Its leading brands included Roxio (which it acquired in 2004) and DivX (which it acquired in 2010) for consumers, and it offered software for CE manufacturers and content producers, as well. In December 2010, Sonic Solutions announced that it would be acquired by Rovi Corporation. In February 2011, Rovi completed the acquisition and subsequently began to incorporate the Sonic brand into the Rovi...
DivX provides the popular DivX codec, which allows for high quality videos and minimal file sizes. DivX, LLC, (NASDAQ: SNIC) a division of Sonic Solutions, enables consumers to enjoy a high-quality video experience across any kind of device. We create, distribute and license digital video technologies that span the “three screens” comprising today’s consumer media environment — the PC, the television and mobile devices. Over 350 million DivX devices have shipped into the market from leading consumer electronics manufacturers. We...