ACTON, MASS.: Video-on-demand specialist SeaChange has entered into a binding agreement to acquire all of the outstanding shares of VividLogic and its technology that reaches into the consumer market.
Under deal terms, 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 Aug. 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 earn-out payments based on the operating performance of VividLogic over the three year period ending Jan. 31, 2013 with payment upon achievement of these metrics occurring annually.
VividLogic was expected to make a small profit on 2009 revenues of around $7 million. The acquisition will place SeaChange in the consumer electronics market.
“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,” SeaChange chief Bill Styslinger said. “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 [Videologic’s] tru2way, MHP and wireless gateway software that will enable our customers to share content and offer next-generation applications.”
Blackstone Advisory Partners L.P. acted as the exclusive financial advisor to SeaChange in the transaction.
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