SeaChange International Announces Agreement to Acquire VividLogic, Inc.Thursday, January 7th, 2010
Profitable Software Company Provides Home Media Gateway Software Platform
ACTON, Mass. — 2010 International CES — SeaChange International, Inc. (NASDAQ: SEAC), a leading provider of software and hardware solutions for video-on-demand (VOD) television, today announced that it has entered into a binding agreement to acquire all of the outstanding shares of VividLogic, Inc. VividLogic is a privately-owned, California-based company that provides software and services to cable television service providers, set-top box manufacturers and consumer electronics (CE) suppliers. Its software products include tru2way™, Multimedia Home Platform (MHP) and Globally Executable MHP (GEM)-based IPTV operability for set-top box and CE manufacturers, and in-home content protection, as well as funded software development for the creation of service provider-sponsored home media gateways. The combination of existing SeaChange in-home technologies and the VividLogic platforms will enable SeaChange to capitalize on the market shift towards IP-delivery into and within the home.
Under the terms of the definitive agreement, SeaChange will pay $12 million in cash upon the closing of the transaction, of which $1.2 million will be deposited in escrow with respect to specified indemnification matters. In addition, VividLogic shareholders will be entitled to the working capital on its balance sheet prior to closing, an amount estimated to be $8.6 million. Of this $8.6 million to be paid in cash, $3.9 million will be paid at closing, $1.3 million will be paid on each of May 1, 2010 and August 1, 2010 respectively and $2 million will be paid on the one year anniversary of the closing. VividLogic’s estimated $8.6 million of working capital at the closing includes approximately $5.9 million in cash.
In addition, SeaChange is obligated to pay $1 million in cash to shareholders of VividLogic on each of the first three anniversary dates following the acquisition. The purchase price will also include earnout payments based on the operating performance of VividLogic over the three year period ending January 31, 2013 with payment upon achievement of these metrics occurring annually.
VividLogic revenues are estimated to be approximately $7.0 million for calendar 2009, and it is expected to generate a small profit for the year.
Commenting on the acquisition, Bill Styslinger, SeaChange Chairman and CEO noted, “VividLogic expands our software product portfolio by providing wireless gateway, tru2way and MHP capability to our in-home offerings. Tru2way and MHP are especially important as both North American and European service providers prepare their networks for customer interactive applications. SeaChange has made great progress with its software strategy. Not only have we established ourselves as the leader in backoffice, advertising and application software, additionally our various in-home software products are deployed in approximately 30 million devices.”
“As the next generation of in-home devices including wireless gateways and cable-ready televisions emerge, it is important that we embrace these technologies to continue to lead in the in-home software markets,” Styslinger continued. “In 2010 our restriction to sell TV Navigator in North America is lifted and, combined with our strong set-top software presence, we plan to offer tru2way, MHP and wireless gateway software that will enable our customers to share content and offer next-generation applications. We are excited about the market changes and the growth opportunities that lie ahead. VividLogic’s leadership in key areas that complement our own software offerings uniquely position us to lead in the next generation of in-home infrastructure software, middleware and application software.”
At the International Consumer Electronics Show (Las Vegas, Jan. 7-10) the companies will demonstrate available solutions in booth Central 15400, including VividLogic’s tru2way software stack and multi-room DVR, and SeaChange’s Intelligent Video Platform for place-shifting across PCs, mobile phones and television set-top boxes.
Blackstone Advisory Partners L.P. acted as the exclusive financial advisor to SeaChange in this transaction.