Inside Secure (Euronext Paris:INSD) has entered into an exclusivity agreement to acquire Verimatrix.The transaction is intended to create a global provider of software-based security with significant penetration of the entertainment market, positioned to capture a well-established, but still fast-growing, demand for security solutions.
The transaction is intended to be signed in January 2019 subject primarily to completion of an "information and consultation" process with Inside Secure's works council in France and vote of Inside Secure's shareholders on the equity financing. It is expected to close in the first quarter of 2019, subject to customary closing conditions.
Under the terms of the acquisition agreement, the transaction consideration consists of an up-front consideration for the enterprise value estimated at $125 million, plus an agreed-upon payment for transferred net cash estimated at $18 million, plus as the case may be a working-capita adjustment at closing, and, finally, an earn-out of up to $15 million subject to Verimatrix achieving a certain EBITDA target for calendar year 2018.
Based on current information, Inside Secure estimates that it will have to pay an aggregate consideration of approximately $143 million at closing plus an estimated $9 million earn-out in the second quarter of 2019.
Amedeo D'Angelo, Chairman and CEO of Inside Secure, said: "Over the years, we have built a unique position to bring security at the heart of connected devices and apps with a leading position in the OTT video services market."
"Verimatrix has become a key player in software-based security for entertainment content management through its scalable and comprehensive platform with a deep expertise in cloud-based data analytics and intelligence on security performance and video users' behaviors.
"In this context, I'm very pleased to move ahead with the project to acquire Verimatrix, which is the perfect fit to strengthen scale and reach of our value proposition in end markets that are fast shifting towards software and cloud-based security solutions while video content consumption is becoming multi-device and multi-format.
"We are looking forward to combining both businesses to offer our clients the best value proposition in security, starting with entertainment and moving towards Internet of Things and connected cars, and to continue to create value for our shareholders."
Tom Munro, CEO of Verimatrix, said: "This transaction allows a great combination of technologies and expertise, bringing two well-respected market players together. It's exciting to create a company with such a clear focus, a global presence, and a depth of expertise in the applications of security and analytics across critical market segments."
