Original URL: http://www.theregister.co.uk/2010/06/02/sonic_divx/
Sonic waves $323m in DivX marriage proposal
Deal promises 'over the top' technology
Roxio owner Sonic has sucked up DivX in a $323m deal it claims will streamline "over the top" movie distribution.
DivX is best known for its codec technology, which enables decent quality video transmission, and has cropped up in a range of devices from handsets to TVs. It is notorious for a long-running dispute with Universal Music Group over its now defunct Stage6 service, which the music giant claimed featured copyright infringing material.
Sonic is probably best known for its Roxio media management software, but also targets the media authoring market as well industrial scale media management software.
The DivX technology is expected to find its way into home video delivery technology from Sonic, with key phrases in the firms' joint statement including "the cloud" and "Hollywood approved DRM". It'll also boost Sonic's efforts to extend its reach into consumer electronic devices - DivX has closed numerous deals with CE firms over the last few years.
The nitty gritty of the deal sees DivX shareholders getting $3.75 in cash and just over half a Sonic share for each DivX share. This will leave them with about 35 per cent of the combined company. Two DivX directors will join the Sonic board.
By comparison, DiVX's market cap at close of play yesterday was in the region of $228m.
Today's deal prompted Sonic to pull forward its Q4 results by a day. These show revenues of $26.4m for the period ending March 31, and net income of $1.2m. First quarter revenues are expected to be $25m. ®