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Ericsson to Acquire Envivio To Boost TV & Media Business

EricssonERIC recently inked a definitive agreement to acquire software-based video encoding company Envivio ENVI for roughly $125 million or $4.10 per share. Aiming to enhance its competitive position in the TV and Media industry with this deal, the company has planned a cash tender offer to purchase Envivio's outstanding shares. Also, shares not tendered in the offer will receive an amount of $4.10 each on completion of the merger.

As of now, 34% of Envivio's stockholders have agreed to Ericsson's offer, and the latter expects to close the transaction in the fourth quarter of 2015 after fulfilling certain customary closing conditions. Post the acquisition, Ericsson plans to integrate Envivio with its Support Solutions segment.

Envivio enjoys a vast global customer base, including 400 TV service providers and content owners, and featuring frontline companies like Comcast CMCSA , Telstra and Time Warner Cable TWC . Headquartered in San Francisco, the company had generated revenues of $43 million in 2014. The company specializes in providing advanced software applications for "pay TV" and other "TV Anywhere" that perform multiple activities like video encoding/transcoding, processing, packaging and ad insertion.

Leveraging Envivio's cloud and software-based video capabilities, Ericsson intends to improve its position in video compression market. This acquisition will boost Ericsson's already diverse media portfolio, which includes media enrichment, processing, publishing, delivery and TV platforms.

Envivio's expertise in video encoding will also allow Ericsson to enhance its video and virtual encoding capabilities, thereby increasing its flexibility in using hardware and software-based video compression.

In a nutshell, this acquisition is a win-win situation for both companies. While Envivio can capitalize on Ercisson's global customer base and thriving broadcast market, the latter will be able to reap benefits from its partner's wide presence in multi screen cable and telecom markets.

As Ericsson's TV & Media business was hit by lower software licensing sales in second-quarter 2015, we believe this buyout will act as a strategic fit, reinforcing the company's position in the broadcast market. Also, the company's strategic focus on diversification, by strengthening its core enterprise as well as growing its adjacent business, is likely to drive maximum growth in the long run.

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ERICSSON LM ADR (ERIC): Free Stock Analysis Report

COMCAST CORP A (CMCSA): Free Stock Analysis Report

TIME WARNER CAB (TWC): Free Stock Analysis Report

ENVIVIO INC (ENVI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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