SeaChange to Acquire VividLogic

VOD technology provider, SeaChange International, announced last week that it has entered into a binding agreement to acquire all the outstanding shares of VividLogic, a privately owned, California-based provider of software and services to cable operators, set-top box manufacturers and consumer electronics suppliers, whose competitors include Alticast, ADB's Osmosys and enableTV. According to SeaChange, VividLogic's software products include tru2way, MHP and Globally Executable MHP (GEM)-based IPTV operability for set-top box and CE manufacturers, in-home content protection and funded software development for the creation of service provider-sponsored home media gateways. The company says that the combination of existing SeaChange in-home technologies and VividLogic's various platforms will enable it to "capitalize on the market shift towards IP delivery into and within the home."

Under the terms of the agreement, SeaChange says, it will pay $12 million in cash upon the closing of the transaction, of which $1.2 million will be deposited in escrow "with respect to specified indemnification matters." In addition, the company says, VividLogic shareholders will be entitled to the working capital on its balance sheet prior to closing--an amount estimated to be $8.6 million: of this $8.6 million, which is to be paid in cash, $3.9 million will be paid at closing, two installments of $1.3 million will be paid on May 1st and August 3rd, and $2 million will be paid on the one year anniversary of the closing of the deal. VividLogic's estimated $8.6 million of working capital includes around $5.9 million in cash, SeaChange says. The deal also obligates SeaChange to pay $1 million in cash to VividLogic shareholders on each of the first three anniversary dates of the acquisition, the company says, and the purchase price will also include earnout payments based on VividLogic's operating performance over the three-year period ending January 31st, 2013, with payment upon achievement of these metrics occurring annually. According to SeaChange, VividLogic's revenues are estimated to be approximately $7 million for 2009, and the company is expected to generate a small profit for that year.

In a prepared statement, SeaChange chairman and CEO, Bill Styslinger, explained the strategy behind the acquisition: "VividLogic expands our software product portfolio by providing wireless gateway, tru2way and MHP capability to our in-home offerings," he said. "tru2way and MHP are especially important as both North American and European service providers prepare their networks for customer interactive applications. SeaChange has made great progress with its software strategy. Not only have we established ourselves as the leader in backoffice, advertising and application software, additionally our various in-home software products are deployed in approximately 30 million devices. As the next generation of in-home devices including wireless gateways and cable-ready televisions emerge, it is important that we embrace these technologies to continue to lead in the in-home software markets. In 2010 our restriction [under the terms of a 2005 agreement with Liberate Technologies] to sell TV Navigator in North America is lifted and, combined with our strong set-top software presence, we plan to offer tru2way, MHP and wireless gateway software that will enable our customers to share content and offer next-generation applications. We are excited about the market changes and the growth opportunities that lie ahead. VividLogic's leadership in key areas that complement our own software offerings uniquely position us to lead in the next generation of in-home infrastructure software, middleware and application software."

At CES last week, SeaChange and VividLogic collaborated on demo's of VividLogic's tru2way software stack and multiroom DVR solution and SeaChange's Intelligent Video Platform for placeshifting across PC's, mobiles and set-top boxes.