Almost six months after striking an all-stock deal to merge, Synacor and Qumu have called off the deal.
The companies on Monday announced the "mutual termination" of a deal originally billed as a "merger of equals" designed to help the combined company take a serious run at the enterprise services market.
At the time, they touted the idea of combining Qumu's Enterprise Video platform with Synacor's Cloud ID Identity & Access Management and its Zimbra-branded email and collaboration system (Synacor acquired Zimbra in 2015).
Before killing a deal that would have given Synacor stockholders 64.4% ownership of the combined company, Synacor and Qumu foresaw the duo driving more than $120 million in annual revenue on a pro forma basis. The deal also would have put Synacor in a position to tie together Qumu's focus on the Global 2000 and Fortune 500 market with its own base of more than 4,000 business, government, service provider, content provider and publisher customers.
According to the terms of a termination agreement that has been approved by the boards of both companies, Minnesota-based Qumu will fork over $250,000 immediately and has agreed to pay Synacor an additional $1.45 million if Qumu inks a binding acquisition deal within 15 months that is ultimately consummated.
Synacor and Qumu didn't go into deep detail on why they got cold feet and severed ties other than to say they decided it was best for both companies to go it alone.
"We mutually concluded after careful consideration that it would not be prudent to continue to pursue the combination and integration of our companies," Synacor Chairman Kevin Rendino and Qumu Chairman Neil Cox said in a joint statement. "We are confident this is the right decision for our shareholders, our customers and our employees. This decision will ensure each of Synacor and Qumu can dedicate the resources and focus to pursue opportunities in their respective industries and businesses."
With the deal now scuttled, Buffalo, New York-based Synacor will continue on with its focus on cloud-based authentication services for TV Everywhere apps and other video streaming services, email and collaboration products and startup pages and portals backed by advertising. Synacor's content and service provider customers include HBO, Dish Network/Sling TV, YouTube TV, T-Mobile, Atlantic Broadband, CenturyLink, Google Fiber, Grande Communications, GCI, Viasat, Telus, TDS and WideOpenWest, among others.
Synacor, which has been transitioning itself to become a more SaaS-focused business, posted first-quarter 2020 revenues of $20.6 million, down from $31.8 million when the loss of the AT&T.net portal business was included, and down from $22.5 million with the AT&T piece excluded. Synacor's net loss widened to $4.5 million (11 cents per share) compared to a net loss of $2.2 million (6 cents per share) in the year-ago period. Synacor ended the quarter with $8.9 million in cash and cash equivalents.
The company stressed in May that the impact of the COVID-19 pandemic has been limited to its publisher advertising line of business, resulting in a sharp reduction in March revenue.
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- AT&T ditches Synacor as portal provider
- Synacor lands deal in Japan for Zimbra
— Jeff Baumgartner, Senior Editor, Light Reading