Harmonic Buys Omneon for $274M

omneon

Harmonic announced today that it has agreed to acquire video server and storage infrastructure company Omneon in a stock-and-cash deal worth $274 million, in a bid to boost its product portfolio for the production, management and distribution of digital media. The acquisition, which is subject to pending regulatory and shareholder approvals, is expected to close in the third quarter.

Omneon sells storage and networking equipment for media companies that are looking to distribute their content digitally. It has an impressive customer base, which includes the BBC, BSkyB, CBS, Comcast, Discovery Communications, Echostar, NBC Universal, News Corporation, Televisa, Turner Broadcasting System and Viacom, among others. Together, Harmonic says the two companies have 2,000 customers across more than 100 countries.

Harmonic has made a number of acquisitions of video technology over the past several years; it bought Entone’s VOD business for $45 million in 2006, and purchased Rhozet’s transcoding technology in 2007. But this is the largest of its recent deals. Harmonic has agreed to pay $190 million in cash and approximately 17.1 million shares of its common stock as part of the transaction. Based on Omneon’s net cash balance of $32 million, the agreement gives the deal an enterprise value of approximately $274 million based on yesterday’s closing price of Harmonic stock.

That’s not a bad price for Omneon, which had sales of approximately $105 million in 2009 and gross margins of 58 percent. The firm also provides a way for Harmonic to expand its customer base, as about two-thirds of Omneon’s revenues came from overseas, and no single customer made up more than 10 percent of its sales.

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