SeaChange scuttles Partner One sale, strikes new deal with Enghouse

SeaChange International's assets are about to change hands after the company obtained a sweeter offer.

The video tech specialist announced late last week that it has struck a new deal to sell its assets to Canada-based Enghouse after terminating a previously announced agreement to sell to Partner One, a software conglomerate based in Riverside, California.

SeaChange, the Boston-area video-on-demand pioneer that later branched into streaming and advanced advertising technologies, said Enghouse has stepped up to acquire "substantially all" of SeaChange's assets (and assume certain liabilities) for a total purchase price of $39 million, less SeaChange's cash and cash equivalents at closing. SeaChange said it expects the deal with result in net proceeds of between $21 million to $23 million.

SeaChange and Enghouse expect to close the deal in early May. The proposed Enghouse-SeaChange deal is subject to a $1.3 million termination fee. SeaChange's original agreement with Partner One contained a $1 million termination fee payable to Partner One.

Third time's the charm?

Weeks ago, SeaChange inked a deal to sell its assets to an "affiliate" of Partner One for a total purchase price of $30 million, with net proceeds of $13 million to $15 million of net proceeds going to SeaChange. In 2021, SeaChange had a deal to merge with Triller Hold Co., but that agreement ultimately fell through.

SeaChange's proposed asset sale to Partner One had been on shaky ground for weeks. On April 10, they amended the deal in a way that raised the aggregate purchase price to $32 million when another party (presumably Enghouse) stepped in with a proposal during a "go-shop" period. A second amendment to the proposed Partner One-SeaChange deal was announced on April 18 that boosted the aggregate purchase price to $34 million.

Adding SeaChange to the mix will broaden Enghouse's video technology services portfolio. In March 2019, Enghouse acquired Espial Group for about $42 million. The Espial deal gave Enghouse access to a company that acquired Arris's Whole Home Solution in 2016 along with a roster of more than 50 customers worldwide, including Tele Columbus, Orange, Altice, Shaw Communications (now part of Rogers Communications), TDS, Com Hem, Vodafone, Videotron and WideOpenWest.

Enghouse now runs two business units – an Interactive Management Group that includes Enghouse Interactive and Enghouse Vidyo, and an Asset Management Group that includes Enghouse Networks and Enghouse Transportation & Public Safety.

SeaChange's customers include Vidaa (Hisense's smart TV platform), Liberty Global, Altice, Cox Communications, Rogers Communications, Frontier Communications, DirecTV and Dish Network, among others. Last November, SeaChange posted fiscal Q3 revenues of $6.6 million and a GAAP net loss of $100,000. It ended the quarter with $16 million in cash, cash equivalents and marketable securities.

"When we set out to identify a strategic partner for SeaChange, our two key goals were to maximize stockholder value and to find a larger home for the SeaChange assets within which the business could scale," SeaChange CEO Chris Klimmer said in a statement. "With Enghouse's commitment to SeaChange and their customer-centric vision for the business, both goals are met."