KIT digital Buys Polymedia For $34.4 Million, Teases Big Upcoming Acquisition

KIT digital, provider of video asset management software and related services, has acquired Italy-based Polymedia for a net consideration of $34.4 million plus performance-based earnouts. Polymedia is the IP video platform-provisioning subsidiary of TXT e-solutions, a company listed on the Italian Stock Exchange.

Thus continues the buying spree of KIT digital. In the past twelve months, it has snapped up Multicast, BenchMark Broadcast Systems, Brickbox, KickApps, Kewego and Kyte.

And apparently, that’s just the beginning (see bottom of this post).

Polymedia’s technology is based on a set of proprietary tools that KIT digital hopes will allow it to more rapidly deploy its network operator and broadcaster solutions. Current deployments include video-on-demand (VOD) stores, subscription VOD, e-commerce integrated product placement promotions and advertising-sponsored content.

The company’s approximately 90 clients include Telecom Italia, Mediaset, Sky Germany, RAI, Vodafone Italia, Ericsson and Belgacom. Polymedia has a total full-time staff of approximately 150, plus more than 70 contractors.

Polymedia, which is profitable, is expected to contribute approximately $19 million in annualized revenue, derived primarily from software licenses, maintenance fees and professional services. KIT digital management expects the Polymedia acquisition to be accretive.

The transaction includes guaranteed payments of $34.4 million at closing (expected in April 2011), comprised of $17.2 million in cash and up to $17.2 million in KIT digital common stock.

An additional amount will be paid in cash as an offset against positive working capital at closing, and the transaction includes up to $4.2 million of KIT digital stock or cash, subject to performance-based earnouts at the first and second anniversary of the transaction.

Following the completion of the acquisition, KIT digital expects to have approximately 39.3 million common shares outstanding and approximately $90 million in cash and equivalents.

The company says its client base currently totals more than 2,000 customers across more than 40 countries.

In a separate press statement issued this morning, KIT digital released its quarterly results, and the company included this fascinating passage:

Through both organic growth and selective acquisitions, the company aims to extend its industry leadership position from a current estimated 30%-plus global market share to a market share level approaching 50% over the next 12-18 months.

The company purposefully sequenced the KickApps, Kewego, Kyte, and Polymedia transactions, and the majority of the proceeds from the December 2010 public equity offering continue to be dedicated to support a prospective larger acquisition in the very near future. KIT digital plans to release news regarding this larger transaction by the end of Q1 or in early April.

Anyone wants to make a guess on who they’re buying next? Myspace? Yahoo? AOL?