Synacor Prices IPO, Expects To Raise Up To $75 Million

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Synacor, a provider of TV Everywhere services and Web portal software to cable and telecom operators, on Monday announced expected pricing of $10 to $12 per share for its initial public offering of 6.82 million shares.

Synacor originally filed for the IPO in mid-November, anticipating that it would raise up to $75 million. The company plans to register 7.84 million shares, including about 1 million shares that may be purchased by underwriters.

In the offering, Synacor plans to sell 6.82 million shares, including 5.45 million new shares of common stock plus 1.36 million shares owned by selling stockholders. Synacor will not receive any proceeds from the sale of stock by its investors, and the underwriters will receive options to buy shares at a discounted rate.

After pricing of the offering, Synacor expects that the shares will trade on NASDAQ Global Market under the symbol "SYNC."

Charter Communications and CenturyLink are Synacor's two biggest customers, together accounting for 65%, 62% and 60% of its revenue for the years ended 2008, 2009 and 2010, according to the IPO filing. In the fourth quarter of 2011, Synacor had an average of 18.7 million monthly users through its customers, according to comScore.

Earlier this month, Synacor named former Charter chief technology officer Marwan Fawaz and Gary Ginsberg, executive vice president of corporate marketing and communications at Time Warner Inc., to its board of directors.

Synacor generated $66.2 million in revenue for the year ended 2010 and posted a net loss of $3.6 million.

For the year ended Dec. 31, 2011, Synacor estimates revenue of between $90.6 million and $91.0 million, an increase of between 36.9% and 37.5% from the year prior, with net income between $3.8 million and $4.2 million.

Among its risk factors, Synacor said it relies significantly on revenue from Google, with which Synacor has a revenue-sharing relationship. Under that deal, Synacor includes a Google-branded search tool on the websites of Charter, CenturyLink and other customers. Google-related revenue was approximately 48%, 45% and 49% of its revenue in 2008, 2009 and 2010, respectively, and approximately 55% of revenue for the nine months ended Sept. 30, 2011.

Synacor's agreement with Google expires in February 2014 "unless we and Google mutually elect to renew it," and Synacor noted that Google may terminate the agreement if Synacor experiences a change in control, if it doesn't maintain certain search and display advertising revenue levels, or upon the two-year anniversary of the agreement in February 2013.

As of Dec. 31, Buffalo, N.Y.-based Synacor had 260 employees in the U.S. and one employee in the United Kingdom. The company's three primary data centers are located in shared facilities in Atlanta, Denver and Amsterdam, The Netherlands, and it also maintains a secondary data center in a shared facility in Buffalo.
Underwriters on the IPO are BofA Merrill Lynch, Citigroup, Stifel Nicolaus Weisel, BMO Capital Markets, Needham & Co. and Oppenheimer & Co.

Synacor's investors include Crystal Ventures, Intel Capital, Advantage Capital Partners, North Atlantic Capital and Walden International.

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