NEW YORK (TheStreet) -- Rovi (ROVI) stock is advancing 8.65% to $18.85 in pre-market trading after the San Carlos, CA-based digital entertainment company agreed to acquire TiVo (TIVO), a next-generation television service provider, in a cash and stock deal valued at $1.1 billion.

Shares of San Jose, CA-based TiVo are rising 5.94% to $9.98 in pre-market trading this morning.

Rovi agreed to pay $2.75 per share in cash and $7.95 per share in common stock of a new holding company that will own Rovi and TiVo.

The companies expect to generate $100 million in annual cost synergies within a year after the transaction closes.

The combined company, which will be called TiVo, will have more than 6,000 issued patents and pending applications in its intellectual property portfolio.

"Rovi's acquisition of TiVo, with its innovative products, talented team, and substantial intellectual property portfolio, strengthens Rovi's position as a global leader in media discovery, metadata, analytics, and IP licensing," CEO Tom Carson said in a statement.

The transaction, which is pending shareholder and regulatory approval, is expected to close in the third quarter of 2016.

Separately, Rovi has a "hold" rating and a letter grade of C at TheStreet Ratings because of the company's disappointing stock performance, which offsets revenue growth, impressive record of earnings per share growth and compelling growth in net income.

You can view the full analysis from the report here: ROVI

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.