KIT digital (NASDAQ:KITD)--which has been on a buying binge in the online video space this year--today said it had acquired ioko for $79.4 million, including future performance-based incentive payments.
The Prague-based company said the acquisition of ioko, which provides end-to-end managed cloud-based platform solutions for multi-screen video delivery over connected IP devices to tier-one telco, cable, media and entertainment companies around the world, would add depth to KIT digital's OTT and connected device platform offerings for its network operator and media and entertainment verticals.
Ioko's allure includes $54 million in annualized revenues related to IP video asset management it currently generates, and a customer list that includes AT&T, BBC, BSkyB, Channel 4, Diageo, Disney, Electronic Arts, FOXTEL, Evolution Gaming, ITV, Liberty Global, LoveFilm, Molson Coors Brewers, Samsung, SeeSaw, Universal Music, Univision and VimpelCom.
The deal wasn't made overnight, but may be one of the last pieces KIT digital needs to play a bigger role in the IP video game on a global scale, said Kaleil Isaza Tuzman, chairman and CEO of KIT digital.
"It also represents the successful conclusion of a carefully managed acquisition process for which we raised outside equity capital in December 2010, and which necessitated the navigation of complex shareholder and regulatory challenges," continued Isaza Tuzman. "We are very pleased that we were able to complete the acquisition of ioko under the originally negotiated terms and close to our originally intended time frame, without ultimately having to go through formal U.S., U.K. or E.U. anti-trust review. We now look forward to integrating our two firms, rapidly realizing the sales synergies we anticipate, and focusing on organic growth and free cash-flow generation going forward."
The total gross consideration KIT digital will pay upfront for ioko is approximately $91.4 million, comprised of $74 million in cash and 1,509,805 restricted shares of KIT common stock. After adjusting for approximately $19 million of cash and approximately $9 million of additional positive net working capital expected on ioko's balance sheet at the time of closing, the net upfront consideration to be paid for ioko is expected to be approximately $63.4 million on a debt-free and cash-free basis. The deal is expected to close in a few weeks.
Kit digital said it will assume a relatively small amount of short-term debt at closing, in order to finance ioko's accounts receivables, which the company expects to pay down quickly.
Several ioko executives will join KIT digital, including ioko's Joint Global CEO Mark Christie, ioko's CEO of North America Scott Sahadi, ioko's CFO Allan Dunn and ioko's Global Chief Sales & Marketing Officer John Griffin.
- see this release
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