Technology licensing company Xperi and set-top box maker TiVo will merge in an all-stock deal, giving the combined entity an enterprise value of $3 billion, the companies said on Thursday.
As part of the deal, each TiVo shareholder will get 0.455 Xperi shares. That represents a premium of nearly 21% to TiVo's Wednesday close, according to Reuters calculations.
Xperi shareholders will own about 46.5% of the combined business and TiVo shareholders 53.5% after the deal, which is structured to allow the combined company book tax benefits from TiVo's $1 billion in federal net operating losses (NOL).
NOLs can often become practically useless if there is an ownership change in the company.
Xperi Chief Executive Officer Jon Kirchner and Chief Financial Officer Robert Andersen will become the CEO and CFO of the new company.
TiVo said it has suspended near-term plans to separate its product and IP businesses in light of the transaction.
Debt of both companies will be refinanced on a combined basis, TiVo and Xperi said, adding they have secured $1.1 billion in committed financing from Bank of America and Royal Bank of Canada.
The deal is expected to close during the second quarter of 2020.