Rovi to Acquire Sonic for $720M


Rovi (NASDAQ:ROVI) inked a deal on Thursday to buy Sonic Solutions (NASDAQ:SNIC) in a stock and cash transaction valued at $720 million, move it hopes will expand its presence in the entertainment industry.

The deal, valued at $14.17 a share, represents a 38.2% premium to Sonic’s 30-day average closing price as of Dec. 21.

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Both leaders in the entertainment industry, Rovi, based in Santa Clara, California, provides next generation guidance solutions including TotalGuide, discovery, metadata, advertising and networking technologies, while Sonic, based in Novato, California, provides digital video processing, playback and distribution technologies.

In a statement, Rovi said the acquisition will enable it to expand solutions to content owners, device makers, retailers and operators, while at the same time powering next generation digital entertainment offerings with content discovery, delivery and enhanced interactivity capabilities.

"Rovi and Sonic share a vision for the future of digital entertainment and how to deliver the best consumer experience possible," said Rovi CEO Fred Amoroso. "Together, we believe the two companies will be able to address the expanding digital entertainment market with unique capabilities that will bring enhanced value to consumers."

Under the terms of the deal, Sonic shareholders may elected to receive either $14 or 0.2489 shares of Rovi common stock for each share tendered and accepted in the exchange offer. Rovi intends to commence the 20-day offer in January.

Upon consummation of the offer, Rovi intends to complete a merger in order to acquire all remaining outstanding shares.

The transaction, subject to customary closing conditions, regulatory approvals and the majority of Sonic stockholders to tender their shares in the offer, is expected to close in the first-quarter of 2011.

Rovi, which plans on using cash on hand to fund the transaction, said Sonic will become its wholly-owned subsidiary upon the deal’s close.

Also Thursday, Rovi upped its 2010 fiscal guidance to a range of $538 million to $542 million for revenue and $2.08 to $2.12 per share.