Rovi Corp will pay $720 million in cash and stock to buy Sonic Solutions, which owns the popular digital video player software DivX, in a bid to broaden its footprint across the digital entertainment space.
The Rovi deal follows Sonic's purchase of DivX Inc in June for $323 million, which boosted Sonic's Internet-based video delivery products.
The proposed combination of Rovi and Sonic will be better able to help Hollywood studio clients sell content in a fast-growing digital entertainment market, the companies said.
Consumers will be able to more easily find the content they want to watch, which may make them more willing to pay higher prices.
Rovi, which provides entertainment data, content protection and content networking technology, will offer $14.17 per share to Sonic shareholders, representing a premium of 26 percent over Sonic's Wednesday close of $11.22 per share.
Under the agreement, Sonic shareholders may elect to receive either $14.00 or 0.2489 shares of Rovi common stock for each share. Cash consideration will constitute 55 percent of the total value of the offer, while rest will be in stock.
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