KIT digital, the premium software and technology services provider for multi-screen video delivery, has moved to strengthen its ability to manage complex and large-scale IP video deployments in the US and the UK by signing a definitive agreement to acquire 100 per cent of the capital stock of digital media platform specialist ioko365 Ltd (ioko) for total prospective net consideration of approximately $79.4 million, including future performance-based incentive payments.
KIT digital suggests that ioko’s sophisticated over-the-top (OTT) capabilities — allowing premium video services delivered over the Internet to be formatted for and presented on televisions and other connected devices — and its closed-network IPTV solutions are expected to add further depth to KIT digital’s OTT and connected device platform offerings for its network operator and media and entertainment verticals.
“This transaction represents the culmination of a three-plus year dedicated process to achieve global scope and market share in the IP video platform software sector, both from a geographical and capabilities perspective,” said Kaleil Isaza Tuzman, chairman and chief executive officer of KIT digital. “It also represents the successful conclusion of a carefully managed acquisition process for which we raised outside equity capital in December 2010, and which necessitated the navigation of complex shareholder and regulatory challenges,” he continued .
Gavin Campion, KIT digital’s president, said the acqisition represented a major milestone in achieving the goals it originally set out in 2008. “We believe we have now reached a level in the vicinity of our market share target — making us the far-and-away leader in our segment — where economies of scale in client delivery and future R&D are particularly powerful,” he stated.
“We see the ioko acquisition as being squarely aligned with our stated strategic objective of delivering larger and more advanced video deployments. ioko has always been strong in this area and will bring their expertise to bear on our global pipeline and operations as KIT continues to orient itself to larger deals. To this end, this acquisition is a key milestone in our current long-term phase of corporate development in 2012 and beyond that is centred primarily on organic growth. We will be focused on internal product development, channel sales, on-the-ground growth in China and other non-M&A related strategic initiatives. We expect to eliminate the distraction of major integration activities — both in terms of internal corporate actions and financial reporting — as we foresee completing all our internal restructuring and integration initiatives and financial charges by the end of Q3.”
Scott Sahadi, ioko’s chief executive officer for North America, said the deal presented a unique opportunity for the combined ioko and KIT digital to provide major players in the US marketplace with the type of industrial-grade IP video management platforms required to manage and monetise premium content on a large-scale basis. “As an established provider of these complex OTT managed services, we will help accelerate KIT digital’s expansion in this direction and fundamentally change the playbook in North American media consumption and delivery,” he said.