Sonic Solutions has today announced that it will acquire digital media company DivX for a hefty $323 million.
The deal means that Sonic will buy out all of DivX’s shares and merge the latter into its current operations. Those who currently hold DivX shares will receive $3.75 in cash and 0.514 in Sonic shares for each DivX share they previously held. This will give current DivX shareholders a roughly 35 percent stake in Sonic once the handover is complete.
Sonic believes that the acquisition of DivX will double its fiscal year earnings per share, providing a big boost to Sonic shareholders. It also hopes to expand its current media format business by offering more delivery of online video, which is a field that DivX excelled in. Part of this is expected to be a cloud service for providing online content. Sonic will also be shipping the DivX media player and DRM in many of its products and hopes the popularity and dependability of DivX will give the Sonic brand a big boost.
“Our studio, storefront, and consumer electronics partners agree: they want a clear and efficient path to deliver premium content to their customers,” said Dave Habiger, president and CEO of Sonic. “The combination of Sonic and DivX promises to be the foremost provider of platforms, tools, and technologies for the efficient delivery of premium video entertainment to virtually any type of consumer electronics device. We expect DivX’s deep technology and broad deployment in the CE and mobile areas to give us significant leverage as we expand and enhance our RoxioNow premium entertainment platform.”
The CEO of DivX, Kevin Hell said that the two companies both recognise there’s a large market for internet video and that the combination of Sonic and DivX will create “a complete end-to-end delivery platform for digital media”.
The acquisition is expected to close in September providing current shareholders approve the deal.