M&A

TiVo, Xperi to Merge, Create Tech Licensing Giant

TiVo opted for the $3 billion merger rather than split its product and patent-licensing businesses.
Matthew HellerDecember 19, 2019

DVR pioneer TiVo has agreed to a $3 billion merger with Xperi in a move that will create one of the leading tech-licensing platforms in the entertainment industry.

The all-stock deal will combine TiVo’s DVRs and other consumer products, entertainment metadata, and patent portfolio with Xperi’s entertainment and semiconductor products and intellectual property. The merged entity will take the Xperi name but will continue to sell entertainment services under the TiVo brand.

TiVo, which was acquired by rival Rovi in 2016 for $1.1 billion, had previously planned to separate its product and patent-licensing businesses in April 2020 but opted for a merger instead.

Technically, Xperi is the acquiring party and the deal values TiVo at about $1.2 billion ($9.53 a share) based on the Dec. 18 closing price of TiVo shares, a 21% premium. (TiVo’s 52-week high is $11.78 a share.)

The $3 billion figure represents the combined enterprise value of the companies.

“TiVo has always been the company that brings entertainment together,” TiVo CEO David Shull said in a news release. “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 OEMs, our combined company will transform the home, car, and mobile entertainment experience for the consumer,” he added.

Referring to the planned split, Shull said the combination with Xperi “will enable us to create even more value for our shareholders in both the near and long term by allowing each to go to market with greater financial and operational scale.”

The new company will have interests in everything from home video to filmmaking to consumer electronics. With more than 10,000 patents and patent applications, it will be one of the largest licensing companies in the world.

Xperi’s largest customer has been Samsung Electronics, which represented 38% of its revenue for 2018. Its other customers and licensees include Huawei, LG, Microsoft, Nikon, Panasonic, and Sony.

“This landmark combination … [is] poised to set the industry standard for user experiences across the digital value chain,” Xperi CEO Jon Kirchner said.

By 4 p.m., Xperi’s shares had fallen 11%, to $18.60. TiVo’s had risen nearly 6%, to $8.36.

Justin Sullivan/Getty Images

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