More Broadcast Vendor M&A: Kit Digital Buys ioko for $79.4m, Completes Buying Spree

Posted by Joe Zaller
Apr 11 2011

IPTV asset management solutions provider Kit digital capped a multi-year acquisition spree last week with the purchase of ioko365, a provider of managed cloud-based platform solutions for multi-screen video delivery, for $79.4m.

Kit digital has made no secret of its intention to grow its market share through strategic M&A activity, and the company’s execution has been interesting to watch:

 

With the announcement of its intention to purchase ioko, Kit digital has finally revealed its long hinted-at “transformative” deal.

Company chairman and CEO Kaleil Isaza Tuzman said the ioko deal “represents the culmination of a three-plus year dedicated process to achieve global scope and market share in the IP video platform software sector, both from a geographical and capabilities perspective. It also represents the successful conclusion of a carefully managed acquisition process for which we raised outside equity capital in December 2010, and which necessitated the navigation of complex shareholder and regulatory challenges.”

According to Kit digital, ioko has 380 employees and full-time contractors and $54m in revenue, comprised of a combination of recurring managed service fees, software licenses, maintenance fees and  professional services. Kit says ioko is profitable, and that it expects the deal to be accretive on both an EBITDA and cash-flow multiple basis.

Based on the closing price of KIT digital common stock of $11.51 on April 8, 2011, the total gross consideration KIT digital will pay upfront for ioko is approximately $91.4m, comprised of $74m in cash and 1,509,805 restricted shares of KIT common stock. After adjusting for approximately $19m of cash and approximately $9m of additional positive net working capital expected on ioko’s balance sheet at the time of closing, the net upfront consideration to be paid for ioko is expected to be approximately $63.4m on a debt-free and cash-free basis.  The net upfront consideration of $63.4m is exclusive of performance-based earn-outs, incentive and personnel retention payments, which are estimated not to exceed $16m over a period of two and a half years after closing, payable in KIT digital restricted stock. Therefore, over time, prospective net consideration is expected not to exceed $79.4m in total.

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Related Content:

KIT digital Acquires ioko, Solidifies Position as Global Leader in IP Video Management and Delivery

More Broadcast Vendor M&A: Kit Digital Buys Three Companies for $77m, Says Larger Acquisition is Coming

More Broadcast vendor M&A: Kit digital Acquires Polymedia for $34.4 Million

KIT digital Reports Q4 and Fiscal 2010 Results, Raises Guidance, Says Big M&A Deal Still on Track

KIT digital Sells $110.4 Million of Stock, Says it will use Proceeds for Broadcast Industry M&A

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