by Donna Block
[Posted on December 7, 2007 - 10:29 AM]
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DiggMacrovision Corp., which develops technology to protect movies and music from piracy, agreed Friday to buy television listings provider Gemstar-TV Guide International Inc. for $2.8 billion in cash and stock.
In a joint statement, the companies said their merger will allow consumers to pull up a guide on their TV and receive personalized content and information regarding their favorite TV shows, read movie reviews before purchasing or renting a film, view personal photos, or tap into their music library. Plans for Gemstar-TV Guide's print operations weren't disclosed.
Under terms of the deal, Santa Clara, Calif.-based Macrovision said it will pay $6.35 in cash or 0.2548 of a Macrovision share for each Gemstar share. The cash offer is 6.2% higher than Gemstar's closing price of $5.98 Thursday. The cash component of the deal won't exceed $1.55 billion, the companies said.
Gemstar-TV Guide announced in July that it hired UBS and Wachtell, Lipton, Rosen & Katz to advise the company on its strategic alternatives. The move came after Rupert Murdoch's News Corp., which has a 41% stake in the company, announced it would buy Dow Jones & Co. It's been speculated that Murdoch wanted to raise cash to fund the Dow Jones deal, which is expected to close before the end of this year.
Rich Battista, CEO of Gemstar-TV Guide, said in the statement the combined entity, "has the potential to redefine the consumer entertainment experience and drive significant additional stockholder value."
Macrovision stockholders will continue to own one share in the new company for each share held at closing. When the deal is completed, Macrovision shareholders will own about 53% of the combined company, and former Gemstar-TV Guide stockholders will own 47%.
Macrovision's Fred Amoroso will continue as president and chief executive of the new company and Chief Financial Officer James Budge will serve as CFO. The new board will include four directors designated by Macrovision, and three chosen by Gemstar-TV Guide.
Gemstar's Battista and CFO Bedi Singh will leave the organization on closing of the acquisition.
Macrovision turned to J.P.Morgan Chase & Co. for financial advice.
The Gemstar board has unanimously approved the transaction, which is expected to close sometime in the second quarter 2008 pending stockholder and regulatory approvals. News Corp. has agreed to vote in favor of the deal.
Last month, Macrovision said it agreed to acquire certain technology assets from Cryptography Research Inc., a San Francisco research-and-development company, for $45 million in cash plus warrants exercisable for Macrovision stock. Macrovision also acquired privately held All Media Guide Holdings Inc., in November. All Media is one of the world's largest providers of information databases for entertainment products, such as music, movies, and games.
Gemstar merged with TV Guide Inc. in a $14.2 billion deal in 2000.
