05.06.2010 04:20 PM
Harmonic Agrees to Buy Omneon for $274 Million
SUNNYVALE, CALIF.: Harmonic has agreed to buy its neighbor, Omneon,
in a cash and stock deal valued at $274 million, the broadcast vendor said
today. Both companies are headquartered in Silicon Valley, just five minutes
apart. The deal combines Harmonic’s video processing technologies with Omneon’s
high-level servers and peripherals.
The combined companies had $425 million in revenues last year. Harmonic’s
totaled nearly $320 million, down from $365 million in 2008. Omneon’s were $105
million compared to $126 million in 2008, before the recession hammered the
broadcast industry. Omneon nonetheless achieved a 58 percent gross margin.
Together, the companies have more than 2,000 customers across 100 countries,
with two-thirds of Omneon’s business coming from outside the United States last
year. The combined workforce will include 450 engineers working in research and
development, and 580 in sales and service--a total of 1,030 people. Harmonic
now has 840 employees, Omneon has 280 for a grand total of 1,120.
There was no mention of layoffs in the Harmonic’s announcement. It said only
that “most of the Omneon executive management team is expected to join Harmonic
at closing,” including Lawrence Kaplan, a founder of Omneon, and Suresh Vasudevan,
Under the terms of the agreement, which has been approved by the boards of directors
of both companies, Harmonic will pay $190 million in cash and issue
approximately 17.1 million shares of Harmonic’s (NASDAQ: HLIT) common stock at
closing price May 5. The value is estimated at $274 million net of Omneon’s
anticipated cash balance at closing of $32 million.
Omneon stockholders have to vote on the deal. Investors include Norwest Venture
Partners, Accel Partners, Advanced Technology Ventures, Meritech Capital
Partners, Invesco Private Capital and Lucent Ventures. Omneon filed for an IPO
in December of 2006 but abandoned the plan last year during the economic
Harmonic’s 100 percent acquisition of Omneon is subject to regulatory approval
and is expected to close the third quarter of 2010.
Harmonic’s acquisition comes a little more than a year after it closed on Tel
Aviv-based Scopus in a deal valued at $50 million. It acquired Santa Clara,
Calif.,-based transcoder Rhozet in 2007 for $15.5 million. The next year,
Harmonic acquired Entone, a San Mateo, Calif., video-on-demand specialist, for
Harmonic also reported its first-quarter results today, posting net revenues of
$84.8 million, up 25 percent from the same period last year. Total bookings for
the quarter ending April 2 were $91 million, up 60 percent. Net income was $5.3
million, or 5 cents a share, compared to a net loss of $18.8 million or 20
cents a share a year ago, when it took charges on the Scopus acquisition.
Cash and equivalents as of April 2 were $267.8 million versus $271.1 million
Dec. 31, 2009.
Harmonic said it expects net revenues for the second and third quarters of 2010
to be $180 million to $190 million, excluding financial impact related to the
-- Deborah D. McAdams