TiVo and Xperi to Merge in All-Stock Deal, Creating Media-Tech and IP-Licensing Company

The new company would have a combined enterprise value of $3 billion.
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Shares of TiVo (TIVO) - Get Report rose 7.2% to $8.46 Thursday after the media technology and audience measurement company said it would merge with Xperi (XPER) - Get Report in an all-stock transaction that would create a company with a combined enterprise value of $3 billion.

Xperi, which licenses technology and intellectual property in areas such as mobile computing, communications, memory and data storage, sank 9.4% to $18.97. 

The agreement calls for TiVo and Xperi shares to be converted into shares of the new parent at a fixed exchange ratio of 0.455 Xperi share per existing TiVo share.

At close, Xperi holders will own about 46.5% of the combined business and TiVo holders about 53.5%.

The new company had $1.09 billion in TiVo revenue and Xperi billings and more than $250 million in operating cash flow on a pro forma basis for the year ended Sept. 30. 

In addition, the companies expect to achieve annualized cost savings of $50 million by year-end 2021.

This boards of both companies have approved terms of the deal. Subject to conditions including regulatory clearances and approval by the holders of both companies, the deal is expected to close in the second quarter.

The two companies said they had more than 10,000 patents and applications between them and minimal licensee overlap. The combined IP business will be one of the world's largest licensing companies, the companies said.

The first step in the combined company’s plan will focus on integrating the companies’ respective product and IP licensing businesses.

The companies said they expected to benefit from a larger and stronger platform to drive growth and innovation, accelerate time-to-market, and improve IP licensing monetization and outcomes.

In May, TiVo said its board had approved appointing Dave Shull as president and CEO, succeeding Raghu Rau, who'd held the posts on an interim basis.

"There is more content, and more ways to enjoy that content, than ever before," Shull said in a statement. 

"With Xperi’s annual licensing of more than 100 million connected TV units, and complementary relationships with major content providers, consumer electronics manufacturers, and automotive original equipment manufacturers, our combined company will transform the home, car, and mobile entertainment experience for the consumer."