TiVo Inc. (NASDAQ: TIVO), a San Jose, CA-based television software services company announced on Thursday that it is in advanced negotiations to be sold to Rovi Corporation (NASDAQ: ROVI), a digital entertainment technology company. TiVo`s shares soared over 20 percent in today`s trading after the announcement.
TiVo is a digital video recorder company that revolutionized the way consumers watch and access home entertainment. Through agreements with leading satellite and cable providers, TiVo integrates its DVR service features into the set-top boxes of mass distributors, which become the center of experiencing new forms of content on the TV. Rovi Corporation, formerly known as Macrovision Solutions Corporation, provides solutions for the discovery and personalization of digital entertainment to service providers and consumer electronics industry worldwide.
According to the report, the deal is primarily about patents. Rovi has lost a recent lawsuit against Netflix concerning over-the-top video streaming, and five of Rovi's patents around interactive TV guides were invalidated by the judge. Rovi may have pursued TiVo for its large patent portfolio as much as its time-shifting DVR technology. If the merger succeeds, the combined company will possess 6,000 issued and pending patents in total. Shareholders of TiVo would receive a combination of cash and stock and would probably own about 30 percent of the combined company based on TiVo and Rovi’s market values.
The buyout is still in a period of uncertainty. It is also worth noting that TiVo has been the subject of takeover rumors with Google, Apple and Microsoft before.