SeaChange Buys Dutch VOD Company

Deal is valued at $36.6 million.
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SeaChange International, an Acton, Mass.-based provider of software and hardware technology for VOD, has acquired eventIS B.V., a privately owned Eindhoven, Netherlands-based company that provides VOD and linear broadcast software and related services to cable TV and telecoms primarily in Europe. The deal is valued at $36.6 million

Under the terms of the agreement, SeaChange agreed to pay 25.5 million euros upfront and will pay 1.2 million euros (US$1.7 million) in cash to the former eventIS shareholders on each of the first three anniversary dates following the acquisition. SeaChange is also obligated on each of the aforementioned anniversary dates to issue shares of restricted stock of SeaChange equating to 800,000 euros (US$1.1 million) annually to the former eventIS shareholders.

SeaChange anticipates that the acquisition of eventIS will help the company’s penetration into the European VOD market and that it expects to deploy its VOD servers with eventIS VOD software “in the very near future.”

"European service providers have shown strong support for eventIS's robust software solutions,” said Bill Styslinger, chairman and CEO for SeaChange International. “With this acquisition, SeaChange has shown its commitment to harness the significant opportunity for the build-out of VOD throughout Europe to complement the company's leading position in North America. With eventIS's leading technology, systems integration capabilities and solid customer relationships, we believe the combined companies can provide the most complete three-screen solution to European service providers today."

SeaChange announced the acquisition on the same day it released its 2Q 2010 financial results, ending July 31. Total revenues for the quarter were $46.5 million, down $4.2 million than the total revenues of $50.7 million for the same quarter a year ago. Net loss for the quarter was $0.4 million ($0.01 per share) compared with net income of $1.5 million ($0.05 per share) for the same period last year. The second quarter net loss included $0.5 million ($0.02 per share) of acquisition-related costs in connection with the purchase of eventIS.

Company executives are optimistic that the acquisition of eventIS—which was profitable in 2008 on estimated U.S. GAAP revenue of approximately $13 million—will soon improve the company’s bottom line, and that overall VOD business will improve for the second half of the fiscal year.

“With the inclusion of eventIS for the final five months of fiscal 2010, we expect revenue in the second half of this year to be approximately 10 percent higher than the first half of this year,” said Styslinger. “Besides the impact of eventIS, we anticipate strengthening demand for VOD servers and VOD software from North American service providers in the second half to offset anticipated softness in the Advertising insertion and Broadcast product segments. We expect to be profitable for the second half of this year, subject to the impact of the accounting for the allocation of the purchase price related to the purchase of eventIS, which we anticipate completing within the next several months.”