Onstream Media, a provider of Internet video services, announced plans Friday to acquire IPTV platform company Narrowstep, in a deal worth up to $19 million.
With Narrowstep's automated IPTV platform, Onstream said it will be able to offer a single platform for acquiring, managing and delivering digital broadcast-quality video to TVs, computers, mobile phones and other devices.
The deal furthers Onstream’s mission of “making Web-based programming indistinguishable from over-the-air, cable or satellite-originated programming,” Onstream president and CEO Randy Selman said in announcing the deal. "With the addition of Narrowstep, we now have a full suite of enabling technologies to address this emerging market requirement.”
Onstream will offer 11.1 million shares of its common stock to Narrowstep shareholders, plus the opportunity to earn up to an additional 8.9 million shares subject to Narrowstep's business achieving revenue-growth targets during the 18 months following the acquisition.
That would value the deal at $10.5 million plus a potential additional $8.5 million, based on Onstream’s $0.95 closing share price Thursday.
Onstream, based in Pompano Beach, Fla., said it expects the deal to close in 90-120 days subject to shareholder approval.
Both companies have agreed to “immediately execute” a restructuring plan designed to significantly reduce or eliminate substantial costs related to Narrowstep's facility leases and other expenses. Onstream expects that Narrowstep will generate operating cash flow on a standalone basis soon after the closing.
Narrowstep, based in Princeton, N.J., provides an IPTV platform designed to “recreate the television-like experience either on the desktop computer screen or through the home television.” The company also says it is able to integrate with IP-based set-top boxes and other IPTV technologies, such as those developed by CableLabs.
Narrowstep’s customers include ITV, Fox International, Outdoor Channel and Torque TV. For 2007, Narrowstep posted $6 million in sales and a net loss of $7.1 million.