NeuLion Inc., a Plainview online broadcasting company, has reached an agreement to acquire San Diego video software maker DivX for $62.5 million.
The Long Island technology company, which trades on the Toronto Stock Exchange, said the move will bolster its ability to provide on-demand digital video.
The transaction will place the combined company at the forefront of the global shift to 4K video and Over-The-Top services in the fast-growing online video market. According to Futuresource Consulting, 4K adoption is forecast to grow quickly from 2015 onward with over 100 million shipments projected in 2018, representing 38% of the total TV market. As live and on-demand secured streaming of content continues to move to digital platforms, NeuLion and DivX together will be a leader in the space from both a technology platform and consumer experience perspective.
“It’s a big move for us into 4K video — that’s four times the quality of HDTV,” NeuLion executive vice president Chris Wagner said.
“By delivering interactive viewing experiences to consumers watching live and on-demand content on digital platforms, from desktop to mobile to connected devices, NeuLion has built a roster of the best known brands in professional and college sports and TV Everywhere, such as NFL, NHL, NBA, UFC, Rogers and CCTV. Now, we are extending our franchise and bolstering our capabilities with our acquisition of DivX’s entertainment and consumer electronics customers, advanced 4K video enabling technology products and expansive geographic reach,” said Nancy Li, chief executive officer of NeuLion.
Added Kanaan Jemili, DivX’s chief executive officer, “As a leading provider of next-generation digital video technologies for Over-The-Top services across consumer electronics devices and mobile platforms, DivX has licensed its technology to global brands spanning consumer electronics manufacturers, entertainment content rights holders and cable network operators, such as LG, Samsung, Toshiba and Hisense. With our recently introduced end-to-end HEVC solution, DivX is helping to drive adoption of 4K video and live streaming. We are excited about the opportunity to extend our reach into the global marketplace while we continue to create technologies that bring high quality viewing experience to digital media consumers.”
Upon closing of the transaction, Nancy Li, NeuLion’s chief executive officer, will become executive vice chairman of the NeuLion board of directors and will drive the technology vision for the company, and Kanaan Jemili, DivX’s chief executive officer, will be appointed chief executive officer of NeuLion. The management teams and employees of both companies will be combined. NeuLion will now have offices and sales reach throughout North America, Europe and Asia.
Under the terms of the definitive agreement, the total value of the transaction is approximately $62.5 million, consisting of $37.5 million in shares of NeuLion common stock and a $25 million two-year convertible note, subject to working capital adjustments.
