Rovi is buying TiVo for $10.70 a share in cash, or about $1.1 billion.
According to a statement Friday, the combined company will be called TiVo, retaining the name of the firm that popularised DVR.
“Rovi’s acquisition of TiVo, with its innovative products, talented team, and substantial intellectual property portfolio, strengthens Rovi’s position as a global leader in media discovery, metadata, analytics, and IP licensing,” Tom Carson, the CEO of Rovi, said in the statement.
Carson will be CEO of the combined company.
Rovi will pay $2.75 a share in cash, or about $277 million. The remaining $7.95 a share will be paid in shares of common stock of a new holding company that will own both firms.
The statement noted that Rovi’s offer represented a 40% premium to TiVo’s closing price of $7.66 on March 23. TiVo closed at $9.42 on Thursday, making Rovi’s offer 13.5% higher based on that.
TiVo shares rose as by as much as 3% in premarket trading. Rovi jumped 6%.
The deal possibly comes after pressure from Glenn Welling of Engaged Capital, who got two seats on Rovi’s board last year, The New York Times earlier reported. TiVo has been looking for a new CEO since the end of January.
The new TiVo would have about $800 million in revenue after purchase accounting adjustments at the end of the full-year 2016, the companies said.
Both boards have approved the deal, and it is expected to close in the third quarter.
Evercore is Rovi’s financial adviser, and LionTree Advisors is working with TiVo.