UEI, Comcast Sign Warrants AgreementMSO Can Acquire Up to 725K Shares of Vendor’s Capital Stock (Update) 3/09/2016 5:45 PM Eastern
Universal Electronics Inc., a maker of universal remote controls and smart home technologies, said it has entered a warrants agreement with Comcast as an extension of the vendor’s arrangement to develop new products in partnership with the MSO.
The agreement follows a development and supply collaboration renewed this year, in which UEI supplies the voice remote for Comcast’s X1 platform. UEI said it’s also positioned to provide products for Xfinity Home, the MSO’s home security and automation service, as well.
“In anticipation of continued sales growth, Comcast now has the opportunity to acquire shares of capital stock from UEI tied to the potential fulfillment of pre-defined purchase milestones under the terms of the warrants agreement,” UEI said.
More details were revealed in this SEC filing, which shows that Comcast has a warrant to purchase up to 725,000 shares of UEI’s common stock, "par value $0.01 per share (the 'Common Stock')," with an exercise price per Warrant Share of $54.55. The warrant provides for “certain adjustments” that could be made to the exercise price and the number of shares issuable due to “customary anti-dilution provisions based on future corporate events.”
UEI shares were trading at $57.83 each, up $2.33 (4.2%), in late afternoon trading Wednesday.
Per the SEC filing, Comcast’s right to exercise the Warrant is subject to vesting during three successive two-year periods, with the first two-year period commencing on January 1, 2016, during which Comcast must purchase (in each two-year period) no less than $260,000,000 in goods and services from UEI and its affiliates.
To vest in all of the Warrant Shares, Comcast and its affiliates must purchase an aggregate of $1,020,000,000 in goods and services from the vendor during the six-year vesting period. The Warrant will be exercisable with respect to vested Warrant Shares, in whole or in part, at any time prior to January 1, 2023.
“This agreement represents a major milestone in our history,” Paul Arling, chairman and CEO of Universal Electronics, said in a statement. “We are privileged to have helped Comcast’s X1 redefine the entertainment viewing experience, and we are now positioned to provide innovative products across XFINITY Home as well.”
Update: UEI is supplying Comcast with an electronic keypad for Xfinity Home, per an FCC document found by The Donohue Report.
Comcast has deployed more than 5 million X1 voice remotes since last May, company chairman and CEO Brian Roberts said at the recent Morgan Stanley Technology, Media & Telecom Conference in San Francisco.
“That’s the fastest ramp of any product we’ve ever done,” he said, noting that the heaviest users of that product use it “a couple hundred times a week.”