Ericsson announced it has agreed to acquire Envivio for $4.10 per share, or approximately $125m.
The deal values Envivio, which had revenue and $41.5m for the year ended January 31, 2015, at more than more than double its closing price of $1.90 in yesterday’s trading.
The board of directors of Envivio has unanimously agreed to recommend that Envivio’s stockholders tender their shares to Ericsson in the tender offer, and a group that collectively owns approximately 34 percent of Envivio’s outstanding common stock, have also expressed support for the deal.
Envivio provides software-based video encoding/transcoding, processing, packaging and ad insertion for broadcasters and pay TV operators.
Ericsson says the deal will “greatly enhance Ericsson’s software video encoding capabilities and its virtualized encoding concept, which enables abstraction of video processing functions from architectural and functional boundaries, enabling the flexibility to use both hardware and software based video compression, as well as any deployment architecture.” Ericsson also said the deal extend its “leadership position in TV and media as a global end-to-end solution provider, strengthen [its] video compression position with combination of software and hardware encoding, [and] bring deep competence in software-defined and cloud-enabled architectures for video processing, enhancing Ericsson’s virtualized encoding approach.”
Ericsson’s acquisition of Envivio comes just a week after Amazon Web Services announced that it will be acquiring multi-screen technology provider Elemental Technologies.
Last year (at NAB 2014), Ericsson and Elemental jointly announced that Elemental’s video processing software had been “fully integrated into the Ericsson Virtualized Encoding solution.” At that time, Dr. Giles Wilson, Head of TV Compression for Ericsson, said: “By expanding Ericsson Virtualized Encoding to also support Elemental software encoding, we are enabling TV service providers to efficiently address the growing complexity of multi-screen TV service delivery within a single solution. As providers strive to address consumer demand for TV Anywhere, we are focused on helping them make the right choices with their multi-screen video processing deployments.”
The combination of Elemental and Ericsson technologies were marketed by Ericsson as the SVP 4000 product family, which according to Ericsson’s website is “a server-based encoder [that] uses standard off-the-shelf GPUs to complement its powerful CPUs and hence provide the best encoding performance on a server-based platform. In this regard it sits alongside the AVP 4000 system encoder, which offers the best encoding performance on a hardware-based platform.”
With Elemental now part of Amazon AWS, Ericsson moved quickly to find a new partner for multi-screen and virtualized encoding, and found a good one in Envivio.
Indeed, the Ericsson’s announcement of the Envivio acquisition specifically mentions that Envivio’s “pure software video processing is available on Intel-based appliances or IT blade servers.”
Interestingly, while the acquisition of Envivio gives Ericsson a good partner for multi-screen delivery, some of Envivio’s technology may overlap with Fabrix Systems, which Ericsson acquired in September 2014 for $95m. At the time of the Fabrix acquisition, Ericsson said Fabrix provides “cloud based scale out storage and computing platform focused on providing a simple, tightly integrated solution optimized for media storage, processing and delivery applications such as cloud DVR and video-on-demand (VOD) expansion.”
Time will tell whether Ericsson believes the technologies acquired from Envivio and Fabrix are complementary or overlapping.
Per Borgklint, Senior Vice President and Head of Business Unit Support Solutions at Ericsson, says: “Our consumer research clearly shows that viewers are demanding TV on their terms on any device, and expecting experiences that continually evolve. We are committed to offering our customers a clear path towards fully agile cloud agnostic platforms that delight TV consumers. I look forward to welcoming the market leader in pure software-defined video encoding, processing, and packaging into Ericsson. The combination will strengthen our encoding position with both custom silicon and pure software encoding, delivering performance and flexibility.”
Ericsson’s acquisition of Envivio is the latest in a series of deals related to online video and transcoding. As broadcasters and media companies scramble to deploy multi-screen services, transcoding is seen by many as a key technology. As a result, transcoding has also attracted its fair share of financing and M&A activity. Here’s a quick run-down of some of the recent transcoding deals and related-financial news:
- In September 2015, Amazon Web Services announced its intent to Acquire Elemental Technologies for an undisclosed amount, but reported by various publications at valuations between $300m and $500m.
- In December 2014, Elemental closed a $15m series D funding round, led by led by Australian telco giant, Telstra, who in August 2014 acquired online video platform provider Ooyala for $360m.
- In September 2014, Telestream announced that its transcoding and workflow revenue increased by 40 percent in 2013 versus 2012
- In April 2014 Ericsson and Elemental Technologies announced that Elemental’s video processing software had been fully integrated with Ericsson’s Virtualized Encoding Solution
- In April 2014, Imagine Communications acquired Digital Rapids for an undisclosed amount
- In April 2014, Dalet acquired Amberfin for an undisclosed amount
- In January 2013, Amazon unveiled its “Amazon Elastic Transcoder.” Based on the company’s Amazon Web Services (AWS) cloud computing platform, the Elastic Transcoder the service provides “a highly scalable, easy to use and a cost-effective way for developers and businesses to transcode video files from their source format into versions that will playback on devices like smartphones, tablets and PCs.”
- In August 2012 Brightcove bought Zencoder, a 2-year old start-up with $2m in revenue for $30m, and subsequently launched a cloud based transcoding service at IBC 2012
- In May 2012, Elemental Technologies closed a $13m fundraising round led by Norwest Venture Partners (NVP), which brought the total amount of funding raised by Elemental to just under $30m.
- In April 2012, audio processing specialist Wohler bought transcoding provider RadiantGrid in a move that the company said will accelerate its move into file-based operations
- In February 2012, Elemental Technologies disclosed that its revenue in 2012 had doubled to $21m thanks to high demand for its transcoding technology
- Envivio had an initial public offering led by Goldman Sachs
- Envivio closed a $16.5m funding round in January 2012, bringing the total raised to $95.1m
- PE firm Thoma Bravo bought out Telestream in December 2011
- Telestream bought fellow transcoding vendor Anystream in September 2011
- Cisco bought Inlet Technologies for $95m in February 2011
- Elemental Technologies closed a $7.5m fundraising round in 2010, bringing the total raised to more than $14m
- RGB Networks bought transcoding vendor Ripcode in 2010
Press Release: Ericsson announces agreement to acquire Envivio
Press Release: Elemental Announces Full Integration with Virtualized Encoding Solution
Press Release: Cloud video transformation accelerated through Ericsson acquisition of Fabrix Systems
© Devoncroft Partners 2009 – 2015. All Rights Reserved.