Sonic to Acquire DivX
By Sonic Solutions, PRNETuesday, June 1, 2010
Combination Creates Digital Video Delivery Powerhouse; Streamlines "Over the Top" Distribution of Hollywood Movies
NOVATO, California and SAN DIEGO, June 2, 2010 - Sonic Solutions(R) (Nasdaq: SNIC) and DivX, Inc. (Nasdaq: DIVX) today
jointly announced that they have signed a definitive merger agreement for
Sonic Solutions to acquire DivX, Inc., a leading digital media company, based
in San Diego, California. Under the terms of the agreement, approved by the
boards of directors of both companies, Sonic would acquire all the
outstanding shares of DivX and merge DivX operations into those of Sonic.
DivX stockholders would receive a combination of cash and stock equal to
US$3.75 in cash and 0.514 shares of Sonic common stock for each share of DivX
they hold. The acquisition, which is expected to close in September 2010, is
subject to approval of the shareholders of both companies as well as
applicable regulatory approvals and customary closing conditions.
For more than 20 years, Sonic has been the leader in developing
technologies for the preparation and delivery of entertainment content in
popular formats - CD, DVD, Blu-ray Disc and most recently Internet delivery
of video. The acquisition of DivX is expected to advance Sonic's mission to
deliver technology that makes it easy and convenient for retailers, online
services, Hollywood studios, and manufacturers of CE and mobile devices to
distribute premium digital video content over the Internet. DivX is expected
to enable Sonic to deepen and broaden the technology it offers for
Internet-based video delivery and expand its relationships with leading
retailers and consumer electronics manufacturers.
DivX is a leading digital media company that enables consumers to enjoy a
high-quality video experience across any kind of device. The DivX brand is
recognized worldwide and supported by a community of millions of consumers.
DivX technology - encoders for formatting video, decoders for playback, and
digital rights management (DRM) for content protection - resides on over 300
million devices shipped into the global market from all major CE
manufacturers including over 8,500 models of digital televisions, DVD and
Blu-ray Disc players, and over 80 different mobile handsets. In addition, the
DivX web properties enjoy more than 12 million unique visits each month.
Sonic believes that the acquisition of DivX will provide a number of key
benefits:
- The acquisition is expected to be accretive to Sonic's shareholders, potentially doubling fiscal year 2012 earnings per share on a non-GAAP basis. - The DivX technologies are expected to give Sonic a more extensive solution for Internet video delivery including the dominant tools for content preparation in "the cloud," video playback, and Hollywood- approved DRM. - DivX is expected to provide leverage to Sonic's strategy of consumer electronics deployment - the DivX player and DRM is deployed in products from more than 150 different CE manufacturers worldwide on millions of devices. - The DivX brand is known worldwide as an indicator of compatibility, quality, and ease of use.
Overall, the combination of DivX technology, capabilities, and market
position is expected to advance Sonic's mission: to make publishing,
delivery, and enjoyment of movies over the Internet as easy and widespread as
DVD delivery is today.
"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 Solutions. "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."
"Sonic and DivX are both market leaders in digital media and share
similar visions about a better media future for consumers," stated Kevin
Hell, CEO of DivX. "We also share similar cultures and both recognize the
tremendous market opportunity that lies ahead for Internet video services. By
combining our products, technologies, partnerships, and talented employees,
we immediately create a complete end-to-end delivery platform for digital
media, with expanded reach and capacity, at a perfect time to capitalize on
the market's rapid development. With the acquisition of DivX, Sonic should be
extremely well positioned to serve existing customers, attract new partners,
and increase our market presence and potential."
The current Sonic management team (including Dave Habiger, Clay Leighton,
Paul Norris, Mark Ely, and Matt DiMaria) will lead the combined company,
augmented with key managers and executives from DivX. Kevin Hell, DivX's
chief executive officer, Dan Halvorson, DivX's chief financial officer and
executive vice president, operations, and David Richter, DivX's executive
vice president, business & legal affairs and general counsel, will be
cooperating closely with the Sonic team to close the transaction and
integrate the companies, but will not continue in the combined company in
their current positions. Following completion of the merger, DivX
stockholders will own approximately 35% of the combined company's capital
stock. Sonic expects to add two members of the DivX board of directors, to be
named later, to its board at the closing of the transaction.
Oppenheimer & Co. is acting as DivX's exclusive financial advisor in the
transaction.
Sonic Earnings Preview and Announcement
As previously announced, Sonic plans to release its financial results for
the fourth fiscal quarter and full year (ending March 31, 2010) on Thursday,
June 3. In order to facilitate discussion with investors on the impact of the
DivX merger, Sonic is announcing today the following key points from its
upcoming earnings announcement:
For the fourth quarter ended March 31, 2010, Sonic recorded US$26.4
million in revenue, US$1.2 million in net income or US$0.04 per fully diluted
share on a GAAP basis. Sonic expects that, for the first quarter of the 2011
fiscal year (the quarter ending June 30, 2010), it will generate
approximately US$25.0 million in revenue.
Shareholders and investors interested in more detail are encouraged to
review the announcement Sonic will make tomorrow, as well as Sonic's Annual
Report on Form 10-K, which it plans to file shortly. In light of today's
announcement, Sonic will not be hosting its previously scheduled earnings
conference call on June 3, and instead encourages participation in the
following joint conference call.
Conference Call Regarding DivX Acquisition
Members of the Sonic and DivX management teams will lead a conference
call to discuss details of the acquisition on Wednesday, June 2, 2010 at 5:30
am PDT (8:30 am EDT). Investors are invited to listen by dialing
+1-877-293-5493 (domestic) or +1-707-287-9350 (international) or via webcast
on the investor sections of the Sonic Web site at
www.sonic.com/about/investor/ and the DivX Web site at
investors.divx.com/. A telephone replay will also be available shortly
following the call on Wednesday, June 2, 2010 through midnight (PT) on
Wednesday, June 9, 2010. The replay will be available by dialing
+1-800-642-1687 (domestic) or +1-706-645-9291 (international) and referencing
the conference ID number 79492916. A replay will also be available via
Webcast at www.sonic.com/about/investor/ and the DivX Web site at
investors.divx.com/.
About DivX
DivX, Inc. is a leading digital media company that enables consumers to
enjoy a high-quality video experience across any kind of device. DivX
creates, distributes and licenses digital video technologies that span the
"three screens" comprising today's consumer media environment-the PC, the
television and mobile devices. Over 300 million DivX devices have shipped
into the market from leading consumer electronics manufacturers. DivX also
offers content providers and publishers a complete solution for the
distribution of secure, high-quality digital video content. Driven by a
globally recognized brand and a passionate community of hundreds of millions
of consumers, DivX is simplifying the video experience to enable the digital
home.
About Sonic Solutions
Sonic Solutions(R) (NASDAQ: SNIC) is powering the digital media ecosystem
through its complete range of Hollywood to Home(TM) applications, services,
and technologies. Sonic's Roxio products enable consumers to easily manage
and enjoy personal media and premium Hollywood entertainment on a broad range
of connected devices. A wide array of leading technology firms,
professionals, businesses, and developers rely on Sonic to bring innovative
digital media functionality to next-generation devices and platforms. Sonic
Solutions is headquartered in Marin County, California.
Forward Looking Statements
This release may contain forward looking statements that are based upon
current expectations, including the timing of the proposed merger, the
expected effects of the merger on the combined operations and financial
results of Sonic Solutions and DivX and other matters related to the proposed
merger as well as the launch, distribution, and market acceptance of their
applications, technologies and services. Actual results could differ
materially from those projected in the forward looking statements as a result
of various risks and uncertainties, including risks relating to completing
the merger and the timing of closing and risks relating to obtaining the
expected benefits of the merger, as well as those discussed in the annual and
quarterly reports filed by Sonic Solutions and DivX with the Securities and
Exchange Commission (the "SEC"). This press release should be read in
conjunction with the most recent annual reports on Form 10-K, Form 10-Q and
other reports filed by Sonic Solutions and DivX with the SEC, which contain
more detailed discussion of the businesses and risks of Sonic Solutions and
DivX, including risks and uncertainties that may affect future results.
Neither Sonic Solutions nor DivX undertakes to update any forward-looking
statements of Sonic Solutions or DivX, except as required by law.
Sonic, the Sonic logo, Sonic Solutions, Roxio, RoxioNow, and Hollywood to
Home, are trademarks or registered trademarks owned by Sonic Solutions in the
United States and/or other countries. DivX and the DivX logo are trademarks
or registered trademark owned by DivX, Inc. in the United States and/or other
countries. All other company or product names are trademarks of their
respective owners and, in some cases, are used by Sonic Solutions under
license.
Additional Information
This press release is not a solicitation of a proxy, an offer to
purchase, nor a solicitation of an offer to sell shares of Sonic Solutions,
and it is not a substitute for any proxy statement or other filings that may
be made with the SEC with respect to the merger. When such documents are
filed with the SEC, investors will be urged to thoroughly review and consider
them because they will contain important information. Any such documents,
once filed, will be available free of charge at the SEC's website
(www.sec.gov) and from Sonic Solutions and its corporate website
(www.sonic.com) or from DivX and its corporate website
(www.divx.com).
Sonic Solutions, DivX and their respective directors, executive officers
and other members of their management may be deemed to be soliciting proxies
from shareholders of Sonic Solutions or DivX in favor of the merger.
Investors and stockholders may obtain more detailed information regarding the
direct and indirect interests in the merger of persons who may, under the
rules of the SEC, be considered participants in the solicitation of these
shareholders in connection with the merger by reading the preliminary and
definitive proxy statements regarding the merger, which will be filed with
the SEC. Information about the directors and executive officers of Sonic
Solutions may be found in its definitive proxy statement filed with the SEC
on October 1, 2009. Information about the directors and executive officers of
DivX may be found in its definitive proxy statement filed with the SEC on
April 20, 2010. These documents will be available free of charge once
available at the SEC's web site at www.sec.gov or by directing a request to
either Sonic Solutions or DivX.
Investor Relations, Nils Erdmann of Sonic Solutions, +1-415-893-8032, nils_erdmann at sonic.com, or Karen A. Fisher of DivX, +1-858-882-6415, kfisher at divxcorp.com; or Press, Chris Taylor of Sonic Solutions, +1-408-367-5231, chris_taylor at sonic.com, or Jen Baumgartner of DivX, +1-503-901-5371, jbaumgartner at divxcorp.com
Tags: california, California And San Diego, June 2, Novato, Sonic Solutions, United Kingdom