Sonic Solutions and DivX, Inc. have signed a merger agreement for Sonic Solutions to acquire DivX, Inc. 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 is a 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 says it believes the DivX technologies will give the company a more extensive solution for Internet video delivery including the dominant tools for content preparation in “the cloud,” video playback, and Hollywood-approved DRM.
The company also expects DivX will 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.
“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.