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TiVo to Merge With Xperi Corp in $2.4 Billion All-Stock Deal

Inventor of the digital video recorder will create new firm with enterprise value of roughly $3 billion

TiVo, the inventor of the digital video recorder, and the audio and imaging technology firm Xperi Corp. on Thursday announced a definitive agreement to merge in an all-stock deal that would give the combined company an equity value of $2.4 billion.

TiVo shareholders would own 54% of the combined company, which would be run by current Xperi CEO Jon Kirchner.

The new company had $1.09 billion in TiVo revenue and Xperi billings and more than $250 million in operating cash flow on a pro forma basis for the twelve months that ended Sept. 30, 2019. The companies expect to achieve at least $50 million in savings by year-end 2021 through the merger.

On Wednesday, TiVo stock closed at $7.89, up 3.27%, while Xperi shares fell 1.55% to $20.94. Each company has a market cap of roughly $1 billion. The combined enterprise value is approximately $3 billion.

Due to the deal, TiVo will suspend its plan to spin off its patent portfolio in the first half of 2020. San Jose-based Xperi also has a portfolio of patents, licensing software for playing back high-definition sounds on consumer electronics and imaging software that lets smartphone cameras recognize faces.

“There is more content, and more ways to enjoy that content, than ever before,” TiVo CEO David Shull said in a statement. “In a rapidly expanding and fragmenting digital universe, consumers want and need to be able to easily find and enjoy the content that matters to them. TiVo has always been the company that brings entertainment together. Now, we can significantly expand our mission. With Xperi’s annual licensing of more than 100 million connected TV units, and complementary relationships with major content providers, consumer electronics manufacturers, and automotive original equipment manufacturers, our combined company will transform the home, car, and mobile entertainment experience for the consumer.”

“This landmark combination brings together two highly complementary companies poised to set the industry standard for user experiences across the digital value chain,” Jon Kirchner, CEO of Xperi, said. “Together, we will be able to integrate TiVo’s leading content aggregation, metadata, discovery, and recommendation capabilities with our home, automotive, and mobile technology solutions to help our customers create experiences that excite and delight consumers. Additionally, the combined company will continue to unlock the value of our strategic and sizable patent portfolios by bringing together our deep industry expertise and powerful innovation engines. Through greater scale and diversity, we will deliver attractive and sustainable long-term cash flow and shareholder value.”