- Two of the industry’s most influential
players join forces to transform media and entertainment
technology
- Best-in-class products and services to
capitalize on evolving entertainment marketplace
- Combined IP portfolios of over 6,000
issued patents and pending applications
- $100 million in annual cost synergies –
accretive to Rovi’s Non-GAAP EPS within the first 12 months
- Adopting “TiVo” as new company
name
- Companies to host joint conference call
today at 8:00 a.m. ET
Rovi Corporation (NASDAQ: ROVI) and TiVo Inc. (NASDAQ: TIVO)
today announced that Rovi will acquire TiVo for $10.70 per share in
cash and stock for total consideration of approximately $1.1
billion. The new company combines two media and entertainment
technology innovators with complementary products, services, and
intellectual property assets and a common mission to write the next
chapter of the consumer entertainment experience. The company will
continue to be led by Tom Carson and upon closing of the
transaction will adopt the iconic TiVo brand as the new company
name.
“Rovi’s acquisition of TiVo, with its innovative products,
talented team, and substantial intellectual property portfolio,
strengthens Rovi’s position as a global leader in media discovery,
metadata, analytics, and IP licensing,” said Tom Carson, CEO of
Rovi. “It’s an exciting time as the media and entertainment
landscape undergoes a significant evolution. The combined
capabilities of TiVo and Rovi place us in a tremendous position to
extend services across platforms and to a customer base that
includes traditional, over-the-top and emerging players across the
globe. By working together, Rovi and TiVo will revolutionize how
consumers experience media and entertainment and at the same time
build value for our stockholders.”
“We’re proud of TiVo’s strong innovation history and of the
ongoing efforts of our team to provide best-in-class products for
our loyal consumer and service provider customers,” said Naveen
Chopra, Interim CEO and CFO of TiVo. “This transaction is the
culmination of those efforts and the logical next step for TiVo. In
joining forces with Rovi, our customers, employees and stockholders
will benefit from being part of a more diversified industry leader
with significantly greater market opportunities. Our combination
creates a more influential global player with a commitment to
product innovation, which will be incredibly well positioned to
redefine television.”
Natural Synergy, Strong Business
This transaction brings together the technology and products
required to achieve the company’s strategic goals and deliver
substantial stockholder value.
- TiVo’s leadership in user experience
and content discovery brings together traditional television, OTT
and on-demand content into one experience across devices
- Rovi’s strength in guides,
personalization, advertising, analytics and cloud services
- On a pro forma basis, for the twelve
months ended December 31, 2016, the combined company is estimated
to have more than $800 million in revenue after purchase accounting
adjustments
- The combined company is expected to
realize at least $100 million in annual cost synergies, with 65
percent of these synergies recognized in the first 12 months
- The expected synergies are in addition
to TiVo’s targeted current year $32 million Adjusted EBITDA
increase from restructuring and margin improvements
- The transaction is expected to be
accretive to Rovi’s Non-GAAP EPS within the first 12 months
post-close
Shared Customers, Global Reach
Rovi and TiVo serve many of the largest pay-TV operators both in
the U.S. and around the world.
- Combined benefits include enhanced
global reach, serving nearly 500 service providers across
countries, adding more than 10 million TiVo-served households to
Rovi’s current base of approximately 18 million households using
Rovi guides worldwide
- Solutions will be integrated to deliver
enhanced customer value and to strengthen relationships with top
partners
Unique Company, Further Innovation
- The transaction will create a company
with a large presence in the consumer, consumer electronic, service
provider and web-scale marketplaces
- TiVo has played an iconic role in
ushering in over a decade of rapid change in how consumers find,
select, and watch television. These consumer innovations have also
been successfully deployed for the benefit of service providers
around the world
- Rovi and TiVo have invested over $1.5
billion in R&D over the past 10 years. Few companies have had a
greater impact on the evolution of TV and video.
- This powerful combination of consumer
innovation and service provider distribution will continue to be a
unique asset of the combined company and will be further enhanced
by Rovi’s prowess in areas like metadata, conversational search,
and data analytics
Strong Intellectual Property Portfolios and Licensing
Business
Together, Rovi and TiVo have worldwide portfolios of over 6,000
issued patents and pending applications worldwide.
- Both Rovi and TiVo have been successful
in monetizing their innovations and intellectual property, with
more than $3 billion in combined IP licensing revenues and past
damage awards
- TiVo’s IP assets, combined with Rovi’s
recent OTT partnership with Intellectual Ventures, further
strengthens the company’s collective position as a leading provider
of intellectual property in media and entertainment discovery
The Most Powerful Analytics in the Industry
The combined company will offer the industry’s most powerful
analytics platform dedicated to media and entertainment, helping
service providers and media companies strengthen consumers’
connections to the content they love.
- Industry leading monetization products
for services providers, advertisers and media companies, with
access to data from multiple platforms including television, mobile
and cloud services
- TiVo’s unique cross-device viewership
data merged with Rovi’s analytics tools will enable better
targeting of media spend, improved advertising inventory yield and
the creation of targeted advertising capabilities for service
providers, advertisers and media companies
- TiVo's cross-device viewership data
will enhance Rovi's Operator Insights and Subscriber Analytics
tools to give service providers more visibility and more precise
methods to improve customer retention and manage churn
***
Transaction Terms
- Rovi will acquire TiVo for $10.70 per
share in cash and stock, approximately $1.1 billion in aggregate
consideration
- Rovi will pay $2.75 per share in cash,
or approximately $277 million, subject to adjustment as described
under the collar mechanism below
- The remainder, $7.95 per share, will be
paid in shares of common stock of a new holding company that will
own both Rovi and TiVo
- Number of shares to be issued to TiVo
stockholders will be calculated based on Rovi’s average VWAP over
the 15 trading days ending on the third trading day prior to close
(the Average Rovi Stock Price) and subject to the collar mechanism
described below
- Rovi stockholders will own one share of
the new holding company for each share of Rovi common stock owned
as of the closing
- Offer represents a premium of
approximately 40 percent over TiVo’s closing price of $7.66 on
March 23, 2016, the last trading day prior to media speculation
about a possible transaction
- Stock component of the consideration is
expected to be a tax-free exchange to TiVo stockholders
- Cash consideration will be financed
from cash on hand in the combined company, and the combined company
is expected to have $150 - $270 million on hand at closing
The Board of Directors of the combined company will include
participation from TiVo’s current Board.
Collar Mechanism
The stock consideration is subject to a two-way collar between
Average Rovi Stock Prices of $16.00 and $25.00.
If Rovi’s stock price increases between the agreement date and
the closing, TiVo stockholders will receive fewer shares (a lower
exchange ratio) until the Average Rovi Stock Price reaches $25.00,
at which point the exchange ratio will be fixed at 0.3180 per
share.
Conversely, if Rovi’s share price decreases between signing and
closing, TiVo stockholders will receive more shares (a higher
exchange ratio) until the Average Rovi Stock Price reaches $18.71.
Between an Average Rovi Stock Price of $18.71 (exchange ratio of
0.4250 per share) and $16.00 (exchange ratio of 0.4969 per share),
Rovi has the option to pay additional cash instead of issuing more
shares. If the Average Rovi Stock Price is below $16.00, Rovi may
set the exchange ratio, in its sole discretion, between 0.4250 and
0.4969. If Rovi makes this election, the per share cash amount will
be $10.70 minus the product of the Average Rovi Stock Price and the
applicable exchange ratio that Rovi elects. In no event will the
cash amount be more than $3.90 per share.
Post-transaction, current Rovi stockholders will own between
66.8 percent and 72.9 percent of the pro forma shares outstanding
in the new holding company, assuming that at Average Rovi Stock
Prices between $16.00 and $18.71 Rovi elects to provide more cash
consideration rather than incremental shares.
Approvals Required
The boards of both companies have approved the transaction. The
transaction is subject to customary closing conditions, including
approval by TiVo’s and Rovi’s stockholders at special meetings to
be held in connection with the transaction as well as clearance
under the Hart-Scott-Rodino Antitrust Improvements Act. The
companies believe that they will be able to obtain the requisite
clearances on a timely basis and the transaction is expected to
close in Q3 of 2016.
NOL Rights Plan
Concurrent with the approval of this transaction, Rovi’s Board
approved the adoption of a Stockholder Rights Plan (the NOL Rights
Plan,) designed to protect Rovi’s $1.2 billion federal Net
Operating Losses (NOLs) from the effect of Section 382 under the US
Internal Revenue Code, which can limit the use of the NOLs. The
completion of the TiVo deal would move Rovi significantly closer to
the 50 percent ownership change outlined in Section 382 and
increase the likelihood of a loss of Rovi’s valuable NOLs. Rovi
believes that its tax attributes represent an important corporate
asset that can provide long-term stockholder benefits and should be
protected. The NOL Rights Plan is similar to those adopted by
numerous other public companies with significant tax assets. The
NOL Rights Plan is set to expire at the earlier of completion or
termination of the TiVo transaction. It is proposed that the
certificate of incorporation of the new holding company will
include a provision that would prohibit transfers of the holding
company’s common stock that would adversely affect the holding
company’s NOL tax asset following the closing. The stockholders of
Rovi will be provided the opportunity to vote on the new holding
company charter in connection with the approval of the transaction.
Following the closing, the holding company board will, from time to
time, review whether the continued effectiveness of the charter
provision and any NOL Rights Plan that may be adopted continues to
be in the best interests of the combined company and its
stockholders.
Advisors
Evercore is serving as financial advisor to Rovi and Cooley LLP
is serving as legal counsel. LionTree Advisors is serving as
financial advisor to TiVo and Skadden, Arps, Slate, Meagher &
Flom LLP is serving as legal counsel.
Conference Call and Webcast Information
Rovi will host a conference call on Friday, April 29, 2016, at
8:00 a.m. Eastern Time (5:00 a.m. Pacific Time) to discuss the
transaction and Q1 financial results. A representative of TiVo will
also join the call. Investors and analysts interested in
participating in the conference are welcome to call 1-866-621-1214
(or international +1-706-643-4013) and reference conference ID
3449304. The conference call can also be accessed via live webcast
in the Investor Relations section of Rovi's website at
http://www.rovicorp.com/.
A replay of the audio webcast will be available on Rovi
Corporation's website shortly after the live call ends and will
remain on Rovi Corporation's website until its next quarterly
earnings call. Additionally, a telephonic replay of the conference
call will be available through May 6, 2016 and can be accessed by
calling 1-800-585-8367 (or international +1-404-537-3406) and
entering conference ID 3449304.
No Offer or Solicitation
The information in this communication is for informational
purposes only and is neither an offer to purchase, nor a
solicitation of an offer to sell, subscribe for or buy any
securities or the solicitation of any vote or approval in any
jurisdiction pursuant to or in connection with the proposed
transactions or otherwise, nor shall there be any sale, issuance or
transfer of securities in any jurisdiction in contravention of
applicable law. No offer of securities shall be made except by
means of a prospectus meeting the requirements of Section 10
of the Securities Act of 1933, as amended, and otherwise in
accordance with applicable law.
Non-GAAP Information
Non-GAAP EPS is defined as diluted earnings per share from
continuing operations, adding back non-cash items such as
equity-based compensation, amortization of intangibles,
amortization or write-off of note issuance costs, non-cash interest
expense recorded on convertible debt under Accounting Standards
Codification (“ASC”) 470-20 (formerly known as FSP APB 14-1),
mark-to-market fair value adjustments for interest rate swaps; as
well as items which impact comparability that are required to be
recorded under GAAP, but that the Company believes are not
indicative of its core operating results such as changes in the
fair value of contingent consideration, gains from the release of
Sonic payroll tax withholding liabilities related to a stock option
review, transaction, transition and integration costs, contested
proxy election costs, restructuring and asset impairment (benefit)
charges, payments to note holders and for expenses in connection
with the early redemption or modification of debt, gains on sale of
strategic investments and discrete income and franchise tax items,
including changes in reserves.
TiVo's “EBITDA” means income before interest income and expense,
provision for income taxes and depreciation and amortization.
TiVo's “Adjusted EBITDA” is EBITDA adjusted for acquisition related
charges for retention earn-outs payable to former shareholders of
the business we acquired and changes in fair value of acquired
business’ performance related earn-outs, transition and
restructuring charges, pre-tax, stock-based compensation,
litigation expenses associated with litigation matters (whether or
not initiated by us) which have the potential to result in revenue
generation and litigation proceeds attributable to past damage
awards, but includes litigation proceeds recognized as technology
licensing revenue.
Forward-Looking Statements
This press release contains “forward-looking” statements as that
term is defined in the Private Securities Litigation Reform Act of
1995, including, but not limited to, statements regarding the
proposed acquisition of TiVo, the integration of TiVo’s IP assets
into Rovi’s products and solutions offerings, Rovi’s plans for such
offerings and customer demand for such offerings, enhanced global
reach, anticipated combined company revenue, synergies and
financial results, future product offerings and expected
transaction timing. A number of factors could cause Rovi’s and
TiVo’s actual results to differ from anticipated results expressed
in such forward-looking statements. Such factors include, among
others, 1) uncertainties as to the timing of the consummation of
the transaction and the ability of each party to consummate the
transaction; 2) uncertainty as to the actual premium that will be
realized by TiVo stockholders in connection with the proposed
transaction; 3) failure to realize the anticipated benefits of the
proposed transaction, including as a result of delay in completing
the transaction or integrating the businesses of Rovi and TiVo; 4)
uncertainty as to the long-term value of the combined companies’
common stock; 5) unpredictability and severity of natural
disasters; 6) adequacy of Rovi’s or TiVo’s risk management and loss
limitation methods; 7) the resolution of intellectual property
claims; 8) seasonal trends that impact consumer electronics sales;
9) the combined companies’ ability to implement their business
strategy; 10) adequacy of Rovi’s, TiVo’s or the combined companies’
loss reserves; 11) retention of key executives by Rovi and TiVo;
12) intense competition from a number of sources; 13) potential
loss of business from one or more major licensees; 14) general
economic and market conditions; 15) the integration of businesses
the combined companies may acquire or new business ventures the
combined companies may start; 16) evolving legal, regulatory and
tax regimes; 17) the expected amount and timing of cost savings and
operating synergies; 18) failure to receive the approval of the
stockholders of either Rovi or TiVo; 19) litigation related to the
transaction; 20) unexpected costs, charges or expenses resulting
from the transaction; and 21) other developments in the DVR and
advanced television solutions market, as well as management’s
response to any of the aforementioned factors. The foregoing review
of important factors should not be construed as exhaustive and
should be read in conjunction with the other cautionary statements
that are included herein and elsewhere, including the Risk Factors
included in Rovi’s Annual Report on Form 10-K for the period ended
December 31, 2015 and Rovi’s Quarterly Report on Form 10-Q for the
period ended March 31, 2016, TiVo’s Annual Report on Form 10-K for
the period ended January 31, 2016, and other securities filings
which are on file with the Securities and Exchange Commission
(available at www.sec.gov). Neither company assumes any obligation
to update any forward-looking statements except as required by
law.
ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION AND
WHERE TO FIND IT
This communication is not a solicitation of a proxy from any
stockholder of Rovi, Titan Technologies Corporation or TiVo. In
connection with the Agreement and Plan of Merger among Rovi, TiVo,
Titan Technologies Corporation (“Parent”), Nova Acquisition Sub,
Inc. and Titan Acquisition Sub, Inc., Rovi, TiVo and Parent intend
to file relevant materials with the SEC, including a Registration
Statement on Form S-4 filed by Parent that will contain a joint
proxy statement/prospectus. ROVI AND TIVO STOCKHOLDERS ARE URGED TO
READ THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED
TRANSACTION WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION ABOUT ROVI, TIVO, PARENT AND THE PROPOSED
TRANSACTION. Stockholders may obtain a free copy of the joint proxy
statement/prospectus (when it becomes available), as well as any
other documents filed by Rovi, Parent and TiVo with the Securities
and Exchange Commission, at the Securities and Exchange
Commission’s Web site at http://www.sec.gov. Stockholders may also
obtain a free copy of the joint proxy statement/prospectus and the
filings with the SEC that will be incorporated by reference in the
joint proxy statement/prospectus from Rovi by directing a request
to Rovi Investor Relations at +1-818-565-5200 and from TiVo by
directing a request to MacKenzie Partners, Inc., 105 Madison
Avenue, New York, New York, 10016, (212) 929-5500,
proxy@mackenziepartners.com.
PARTICIPANTS IN THE SOLICITATION
Rovi, Parent, TiVo and their respective directors and executive
officers and other members of their management and employees may be
deemed, under Securities and Exchange Commission rules, to be
participants in the solicitation of proxies in connection with the
proposed transaction. Information regarding Rovi’s directors and
officers can be found in its proxy statement filed with the
Securities and Exchange Commission on March 10, 2016 and
information regarding TiVo’s directors and officers can be found in
its proxy statement filed with the Securities and Exchange
Commission on June 1, 2015. Additional information regarding the
participants in the proxy solicitation and a description of their
direct and indirect interests in the transaction, by security
holdings or otherwise, will be contained in the Form S-4 and the
joint proxy statement/prospectus that Parent will file with the
Securities and Exchange Commission when it becomes available.
Stockholders may obtain a free copy of these documents as described
in the preceding paragraph.
©Rovi 2016. Rovi is a registered trademark of Rovi Corporation.
TiVo is a registered trademark of TiVo Inc. and/or its
subsidiaries. All other brands and product names and trademarks are
the registered property of their respective companies.
About TiVo
TiVo Inc. (NASDAQ: TIVO) is a global leader in
next-generation television services. With global headquarters in
San Jose, CA and offices in New York, NY, Durham, NC, and Warsaw,
Poland, TiVo's innovative cloud-based Software-as-a-Service
solutions enable viewers to consume content across multiple screens
in and out-of-the home. The TiVo solution provides an all-in-one
approach for navigating the 'content chaos' by seamlessly combining
live, recorded, on-demand and over-the-top television into one
intuitive user interface with simple universal search, discovery,
viewing and recording from a variety of devices, creating the
ultimate viewing experience. TiVo products and services are
available at retail or through a growing number of pay-TV operators
worldwide. TiVo's multiple subsidiary companies provide the broader
television industry and consumer electronics manufacturers with
set-top box, cloud-based video discovery and recommendation
options, interactive advertising solutions, and audience research
and measurement services. More information
at: www.TiVo.com.
About Rovi
Rovi Corporation (NASDAQ: ROVI) is creating personalized and
data-driven ways for viewers to discover the right entertainment
and for providers to discover the right audiences. Chosen by top
brands in entertainment content, services and devices, Rovi touches
the lives of hundreds of millions of consumers by providing
comprehensive solutions, customizable products and technology
licensing to make discovery simple, seamless and personal. With
more than 5,000 issued or pending patents worldwide, Rovi is
advancing entertainment and audience discovery. Learn more
at www.rovicorp.com or follow us on Twitter @rovicorp.com.
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version on businesswire.com: http://www.businesswire.com/news/home/20160429005369/en/
Rovi CorporationPress:Ricca
SilverioVice-President, Finn
Partners+1-949-439-7869ricca.silverio@finnpartners.comorHoward
SolomonManaging Partner, Finn
Partners+1-415-272-0767howard.solomon@finnpartners.comorInvestors:Peter
AusnitVP, Investor
Relations+1-818-565-5200peter.ausnit@rovicorp.comorTiVoPress:Steve
WymerVP,
Communications+1-408-519-9254swymer@tivo.comorInvestors:Derrick
NuemanVP, Investor Relations+1-408-519-9677dnueman@tivo.com
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