Sonic strikes deal to acquire DivX, strengthens OTT play

Premium video content technology and services provider Sonic Solutions (NASDAQ:SNIC) today announced it had acquired digital media company DivX (NASDAQ: DIVX) in a deal that Sonic says will enable it to deepen and broaden the technology it offers for Internet-based video delivery and expand its relationships with leading retailers and consumer electronics manufacturers.

The deal, expected to close in September, gives DivX shareholders a combination of cash and stock equal to $3.75 in cash and 0.514 shares of Sonic common stock for each share of DivX they hold.

DivX resides on over 300 million devices shipped into the global market from all major CE manufacturers including over 8,500 models of digital televisions, DVD and Blu-ray Disc players, and over 80 different mobile handsets. DivX technology includes encoders for formatting video, decoders for playback, and digital rights management (DRM) for content protection.

Sonic, which has been expanding its OTT delivery and VOD role of late, said the DivX technologies will give it a more extensive solution for Internet video delivery including the dominant tools for content preparation in "the cloud," video playback, and Hollywood-approved DRM.

It also expects the deal to potentially double fiscal year 2012 earnings per share on a non-GAAP basis.

"Our studio, storefront, and consumer electronics partners agree: they want a clear and efficient path to deliver premium content to their customers," said Dave Habiger, president and CEO of Sonic Solutions. "The combination of Sonic and DivX promises to be the foremost provider of platforms, tools, and technologies for the efficient delivery of premium video entertainment to virtually any type of consumer electronics device. We expect DivX's deep technology and broad deployment in the CE and mobile areas to give us significant leverage as we expand and enhance our RoxioNow premium entertainment platform."

The current Sonic management team (including Dave Habiger, Clay Leighton, Paul Norris, Mark Ely, and Matt DiMaria) will lead the combined company, augmented with key managers and executives from DivX. Kevin Hell, DivX's chief executive officer, Dan Halvorson, DivX's chief financial officer and executive vice president, operations, and David Richter, DivX's executive vice president, business & legal affairs and general counsel, will not continue in the combined company in their current positions.

For more:
- see this release

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