SeaChange International is looking to capitalize on cable's shift to IP-delivered video with the acquisition of VividLogic, a privately held developer of middleware for set-top boxes and consumer electronics, in a deal worth at least $12 million in cash.
The deal brings to SeaChange the VividLogic portfolio of software products that include tru2way, Multimedia Home Platform (MHP) and Globally Executable MHP (GEM) middleware. SeaChange chief strategy officer Yvette Kanouff said the idea is to bring a "hardware-agnostic" solution to service providers.
"As the operators are looking forward toward this next generation of tru2way and home gateways, one of the interesting things is VividLogic is actively participating in that," Kanouff said.
About 30 million set-top boxes worldwide currently run SeaChange software, which includes TV Navigator middleware and VODLink navigational tool. In 2010, SeaChange is no longer restricted from selling TV Navigator in North America, as it had been under the terms of its 2005 deal with Liberate Technologies, which originally developed TV Navigator.
At the International Consumer Electronics Show here, SeaChange and VividLogic plan to demonstrate VividLogic's tru2way software stack and multiroom DVR, along with SeaChange's Intelligent Video Platform for place-shifting across PCs, mobile phones and set-top boxes.
VividLogic had an estimated $7 million in revenue for calendar 2009 and expects to have generated a small profit for the year, SeaChange said.
VividLogic's customers include Cisco Systems, Pace, HP, Sony, Panasonic, Pioneer, Samsung and Mitsubishi. One of its competitors is Alticast, which also sells tru2way and MHP middleware software.
The Fremont, Calif.-based company was founded in December 1999 and has about 40 employees. VividLogic chairman and CEO Shiva S. Patibanda is also the chairman of Home Audio Video interoperability (HAVi) consortium and a board member of the IEEE 1394 Trade Association, which oversees the FireWire specification.
Under the terms of the definitive agreement, 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 that will be paid out over the next 12 months.
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 undisclosed earnout payments based on the operating performance of VividLogic over the three-year period ending January 31, 2013.
Blackstone Advisory Partners L.P. acted as the exclusive financial advisor to SeaChange in the deal.
SeaChange last fall acquired eventIS Group B.V., a Dutch provider of linear broadcast and VOD software, in a deal worth at least $36.6 million.