Sonic scoops up DivX in $300 million deal

The company behind Roxio and CinemaNow says it plans to buy video codec company DivX. Sonic Solutions says it will pay $9.38 per share for DivX, in a deal that would be worth around $300 million. It is still subject to shareholder approval, but is expected to be completed by September.

DivX distributes and licenses digital video technologies that allow content playback on more than 300 million devices, including PCs, TVs, and mobile devices. Sonic executives say owning DivX will help in their quest to deliver video content to a larger array of gadgets. "DivX has a tremendous reach into consumer electronic devices. By combining with DivX, we've seen a way to accelerate our content into the living room," said Mark Ely, executive vice president of strategy for Sonic Solutions. Sonic signed a deal last year to provide a video content delivery network for Best Buy. The goal is for every Internet-connected consumer electronics device sold at the retailer to have access to Sonic's CinemaNow movie download service. Sonic hopes to increase the brand name recognition of DivX. "If things go the direction that we'd like, you'll see expansion of DivX as a brand associated with premium content delivery," said Ely. "Our goal is that DivX becomes as prominent a brand format in the U.S. as it is in Europe and Asia." DivX CEO Kevin Hell, CFO Dan Halvorson, Executive Vice President of Business and Legal Affairs David Richter will stay through transition period, but will not be part of company after deal closes in September. The current Sonic management team will lead the combined company, though DivX shareholders will own about 35 percent of it.
Source: CNET News (http://cnet.com/)