NeuLion to Acquire DivX in $62.5 Million Deal

Globalizes NeuLion’s reach
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PLAINVIEW, N.Y.—NeuLion, provider of live and on-demand content to Internet-connected devices, has signed a definitive agreement to acquire DivX LLC, a provider of next-generation digital video solutions.

Under the terms of the definitive agreement, the total value of the transaction is approximately $62.5 million, consisting of $37.5 million in shares of NeuLion common stock and a $25 million two-year convertible note, subject to working capital adjustments. At closing, NeuLion will issue 35,890,216 shares of common stock at a set price of approximately $1.045 per share based on the five-day VWAP for the stock as of the market close on Dec. 24, 2014.

Bringing together NeuLion’s managed services and DivX’s technology products, NeuLion will be able to give customers the choice of either building and managing digital video platforms internally or licensing a fully integrated managed services solution.

Upon closing of the transaction, NeuLion CEO Nancy Li will become executive vice chairman of the NeuLion board of directors and will drive the technology vision for the company, and DivX CEO Kanaan Jemili will be CEO of NeuLion. The management teams and employees of both companies will be combined. NeuLion will now have offices and sales reach throughout North America, Europe and Asia.

Upon closing of the transaction, James Hale, DivX’s chairman and managing partner at Parallax Capital Partners, LLC, and John Coelho, a member of DivX’s board of directors and partner at StepStone Group LP, will join the NeuLion board of directors. As a result, NeuLion will expand its board to 11 seats.

NeuLion management expects the transaction to be accretive on a GAAP operating income basis for 2016 and immediately accretive on a non-GAAP adjusted EBITDA basis. For the six-month period ended Sept. 30, 2014, the period DivX has been a stand-alone private company, DivX had estimated GAAP unaudited revenues of $10.8 million and estimated non-GAAP revenues of $26.6 million, and an estimated GAAP unaudited consolidated net loss of $7.4 million and non-GAAP Adjusted EBITDA of $3.5 million. A reconciliation of the GAAP to non-GAAP figures can be found in a table at the end of this release.

The transaction, which has been approved by the boards of directors of NeuLion and DivX, is expected to close in the first quarter of calendar 2015 subject to customary closing conditions.

Needham & Company provided a “fairness opinion” to NeuLion’s board of directors.