TiVo is continuing its push into the licensing market with a deal to merger with Xperi, owner of the DTS, Invenas, Tessera and other IP brands. The companies have agreed an all-stock merger, giving Tivo's shareholders 53.5 percent of the new company.
The merged group will continue under the Xperi name, while maintaining use of the TiVo brand in the consumer entertainment market as well as Xperi's other brands. Xperi's CEO Jon Kirchner will lead the group, while TiVo CEO David Shull serves as a strategic adviser.
Pending completion of the merger, TiVo has put on hold its plans to split into separate hardware and licensing companies. The company said the merger with Xperi will strengthen both sides of the business, and the companies may look later again at separating the product side from the IP licensing.
The merged company will have just over USD 1 billion in revenue, and the group sees room to grow this through cross-selling to each other's customer bases, especially in the home and automotive segments. Additionally, the companies expect to achieve at least USD 50 million of annual cost savings by year-end 2021 through the integration of their respective product and IP licensing businesses, the majority of which are expected within the first twelve months after closing. They've also arranged USD 1.1 billion in financing from Bank of America and Royal Bank of Canada to support refinancing of their debt.
Under the terms of the merger agreement, the shares of TiVo and Xperi stockholders will be converted into the shares of the new parent company based on a fixed exchange ratio of 0.455 Xperi share per existing TiVo share. Subject to regulatory and shareholder approvals, the merger is expected to close in Q2 2020.
