NeuLion, a company that specializes in the delivery of live and on-demand video streams, said it will dive more deeply into OTT services, expand into new international markets, and accelerate its 4K video strategy following its $62.5 million acquisition of DivX, a maker of video encoding and delivery technologies.
The financial terms of the deal are comprised of $37.5 million in shares of NeuLion common stock and a $25 million two-year convertible note, subject to working capital adjustments. At closing, NeuLion will issue 35.89 million shares of common stock at a set price of approximately $1.045 per share based on the five-day volume weighted average price for the stock as of the market close on December 24, 2014.
NeuLion said the deal, expected to close in the first quarter of 2015, will allow it to pair its managed services with DivX’s technology products, giving customers the option to build and manage their digital video platforms internally or license a fully integrated platform.
DivX has passed through several hands through recent years. Sonic Solutions first acquired DivX in 2010 for $323 million, and later that year became part of Rovi, when Rovi acquired Sonic Solutions for $720 million in cash and stock. Last year, Parallax Capital and StepStone Group struck a deal to acquire DivX and its subsidiaries from Rovi for $75 million.
NeuLion timed the announcement with this week’s International CES, which will apply a heavy emphasis on digital video delivery platforms and products.
“By delivering interactive viewing experiences to consumers watching live and on-demand content on digital platforms, from desktop to mobile to connected devices, NeuLion has built a roster of the best known brands in professional and college sports and TV Everywhere, such as NFL, NHL, NBA, UFC, Rogers and CCTV,” said NeuLion CEO Nancy Li, in a statement. “Now, we are extending our franchise and bolstering our capabilities with our acquisition of DivX’s entertainment and consumer electronics customers, advanced 4K video enabling technology products and expansive geographic reach.”
Among recent deals, NeuLion is powering the Rogers NHL GameCenter LIVE service and teamed up to support Big Ten Network’s hybrid TV Everywhere product and BTN2Go redesign.
DivX, meanwhile, noted that has licensed its technology to a range of service providers and CE manufacturers, including LG Electronics, Samsung, Toshiba and Hisense. Among recent offerings, DivX introduced an HEVC-based offering aimed at 4K video. DivX claims that more than 1 billion DivX-enabled devices have been shipped globally, and its software products have been downloaded more than 1 billion times.
Once the deal is closed, Li will become EVP of the NeuLion board of directors and will head up the technology vision of the company, while Kanaan Jemili, DivX’s chief executive officer, will be appointed CEO NeuLion. The management teams and employees of both companies will be combined, they said, noting that the acquisition will give NeuLion offices and sales reach throughout North America, Europe and Asia.
Additionally, James Hale, DivX’s chairman and managing partner at Parallax Capital Partners, LLC, and John Coelho, a member of DivX’s board of directors and partner at StepStone Group LP, will join the NeuLion board of directors. As a result, NeuLion will expand its board to 11 seats.