Harmonic – definitive agreement to acquire Omneon11 May 2010
An agreement has been signed that could see Harmonic acquire Omneon for an enterprise value of approximately $274 million in cash and Harmonic stock. Subject to the usual approvals, the proposed acquisition is expected to close in Q3/2010.
According to Harmonic, the proposed acquisition would combine Harmonic’s market-leading position in video delivery infrastructure with Omneon’s market-leading technology for the production, management and distribution of digital media.
“This proposed combination will position Harmonic to become a global leader in video infrastructure for the digital media industry,” said Patrick Harshman (pictured), president and CEO of Harmonic. “Media companies are being driven by ever-increasing demand for video content coupled with consumers’ desire to consume video anytime and anywhere. At the same time, the dramatic growth of video delivery over broadband and wireless networks is blurring traditional boundaries between content producers and service providers. With our deep customer relationships with content producers and service providers, and with our market leading technologies that span content acquisition through delivery, we believe that our combined company will be uniquely positioned to capitalize on these trends and to accelerate revenue growth.”
Omneon’s customer base includes the BBC, BSkyB, CBS, Comcast, Discovery Communications, Echostar, NBC Universal, News Corporation, Televisa, Turner Broadcasting System, Viacom and many other leading media companies worldwide. For the year ended December 31, 2009, Omneon’s revenues were approximately $105 million, of which 67% were outside the United States, with no single customer representing more than 10% of total revenue.
“The combined company will have industry-leading technology and expertise in video compression, processing and delivery, video-optimized storage, production and playout servers, and media management,” said Suresh Vasudevan, CEO of Omneon. “Not only are the technologies complementary, but we see unique opportunities to leverage our technology adjacencies and drive market-leading innovation. We are very excited about this combination and the opportunities it creates for our customers and employees.”
The products and solutions of the combined company are deployed with over 2,000 customers across more than 100 countries, for broadcast and on-demand video services delivered via cable, satellite, telco, terrestrial, broadband and mobile networks. The company will have a combined video-focused global R&D organization of 450 engineers, a combined global sales and service organization of 330 people and a network of over 250 global sales channel partners.
Under the terms of the definitive agreement, which has been approved by the Boards of Directors of both companies, Harmonic will pay $190 million in cash and issue approximately 17.1 million shares of its common stock. The proposed acquisition is subject to customary closing conditions and regulatory approvals, and is expected to close in the third quarter of 2010. The proposed acquisition is also subject to the approval of Omneon’s stockholders, and Harmonic has entered into voting agreements with holders of a majority of Omneon’s outstanding shares of capital stock, pursuant to which such Omneon stockholders agree to vote in favor of the transaction.
Most of the Omneon executive management team is expected to join Harmonic at closing.