Tossing a possible monkey wrench into its proposed merger with TiVo, Xperi Corp. announced Sunday it had received an unsolicited, non-binding proposal from Metis Ventures to acquire the outstanding equity of Xperi for $23.30 per share in cash, or about $1.16 billion.
Metis Ventures said the offer represents a 33% premium to the 30-day trading average of Xperi shares prior to its proposed offer, and an 11% premium to Xperi shares as of December 18, 2019, the last trading day prior to the announcement of the Xperi-TiVo merger.
Update: Tom Lacey, a managing member of Metis, is also the former CEO of Xperi. Lacey stepped down as CEO of Xperi in May 2017.
Xperi shares were down 36 cents (1.83%) to $19.06 each, in Monday morning trading. TiVo shares were down almost 3%, to $8.58 each.
Xperi was unmoved by Metis Ventures' bid, expressing its "continued support and enthusiasm" for its pending merger with TiVo. The TiVo deal remains in the best interests of Xperi and its shareholders, Xperi added, noting that its board is not modifying or withdrawing its recommendation with respect to the TiVo merger.
The Xperi-TiVo transaction is expected to close sometime in the second quarter of 2020.
"After a comprehensive review and discussion of Metis Ventures' proposal ... Xperi's board of directors has unanimously determined that, based on the current non-binding terms and conditions, as well as lack of information, it is unable to conclude at this time that Metis Ventures' non-binding proposal is reasonably likely to lead to a Superior Proposal under the terms of Xperi's merger agreement with TiVo," Xperi said in a statement. "Therefore, Xperi will not be engaging in discussions with Metis Ventures and does not intend to make any further comment at this time."
According to an all-stock agreement announced late last year, Xperi stockholders will own about 46.5% of the combined business, with TiVo stockholders owning 53.5%. TiVo and Xperi, which have placed an enterprise value of about $3 billion on the deal, have also announced plans to eventually separate TiVo's and Xperi's products and intellectual property/licensing businesses.
Metis Ventures submitted its unsolicited offer to the Xperi board on Friday, February 21, holding that its proposal offers Xperi shareholders "liquidity in a manner that is both more certain and timely than the current proposed transaction with TiVo."
Noting that both Xperi and TiVo shares have declined since the deal was announced alongside its own purported due diligence, Metis Ventures likewise believes it places greater value in Xperi's business on a standalone basis.
Why this matters
The Xperi-TiVo transaction is currently on track, but the deal could be threatened if Metis Ventures decides to sweeten the offer and cause the Xperi board to reconsider its options. If the deal falls apart, TiVo will be back to square one and possibly return it to an earlier plan to separate its products and licencing business into two separate entities.
TiVo and Xperi claim that a combination will drive scale into their respective products businesses, which span software, hardware and silicon technologies that cross into several markets, including home audio and pay-TV, smart TVs and smartphones, video streaming, advanced advertising, content search and discovery and automotive entertainment.
- TiVo, Xperi tout scale benefits of proposed all-stock combo
- Xperi, TiVo Strike All-Stock Merger
- TiVo seeks 'win' in the streaming wars with new OTT device
- CES 2020: TiVo enters the streaming fray, teams with Sling TV
— Jeff Baumgartner, Senior Editor, Light Reading