Ericsson aims to shore up its multiscreen video platform and add some tier 1 cable operators to its customer mix as it puts up $125 million for Envivio, the multiscreen video processing company that went public in April 2012.
Ericsson said it will pay $4.10 per share in cash for Envivio, whose shares closed at $1.90 (down 4 cents, or 2.06%) on Wednesday.
Envivio, they noted, has an installed base of more than 400 TV service provider and content owner customers, including tier 1s that include Comcast, Cox Communications, Liberty Global, Sky, Telstra and Time Warner Cable. Envivio’s cloud-based video processing platform runs on Intel-based appliances or IT blade servers.
Envivio’s been on a roller coaster ride of sorts since going public, as revenues ebbed and flowed based on fluctuating demand. Envivio, which added former TWC CTO Mike Lajoie to its board earlier this year, has been the upswing of late, with revenues rising 23% in the second quarter. Envivio, founded in 2000 and based in San Francisco, pulled in $43 million for all of 2014.
Ericsson’s acquisition of Envivio, a company with about 200 employees, also marks more consolidation in the video multiscreen sector, coming the week after Amazon Web Services acquired Elemental Technologies for a reported $500 million. The deal also comes about a year after Ericsson tacked on more cloud DVR and VOD technologies via its $95 million acquisition of Israel-based Fabrix Systems. Ericsson closed its acquisition of Microsoft's Mediaroom business in September 2013.
Ericsson said the acquisition will enhance its software video encoding and virtualized encoding capabilities.
“I look forward to welcoming the market leader in pure software-defined video encoding, processing, and packaging into Ericsson,” Per Borgklint, SVP and head of business unit support solutions at Ericsson, said in a statement. “The combination will strengthen our encoding position with both custom silicon and pure software encoding, delivering performance and flexibility."
The deal is expected to close in the fourth quarter, and have Envivio become part of Ericsson’s Segment Support Solutions unit. The board of directors of Envivio has unanimously agreed to recommend that Envivio's stockholders tender their shares to Ericsson in the tender offer.