Bloomberg

Rovi Corp. (Nasdaq: ROVI), which provides on-screen guides for pay-TV listings, agreed to buy digital-video recording pioneer TiVo Inc. (Nasdaq: TIVO) in a deal valued at $1.1 billion.

Rovi will pay $10.70 a share in cash and stock, a 40 percent premium over TiVo’s closing price of $7.66 on March 23, the last trading day prior to media speculation about a possible deal, according to a statement Friday. TiVo closed at $9.42 Thursday.

The two businesses are so similar that a combination was seen as compelling in terms of both revenue and cost synergies, Bloomberg News reported Thursday. The combined entity will adopt the TiVo name and be led by Rovi Chief Executive Officer Tom Carson, according to the statement. In 2014, Rovi acquired Veveo, a provider of voice search and personalized entertainment recommendation services.

The new company is expected see $100 million in annual cost savings from the deal. On a pro forma basis, it will see more than $800 million in revenue this year after purchase accounting adjustments, it said.

Much of TiVo’s value to Rovi derives from intellectual property related to its development of DVRs. TiVo successfully settled several patent infringement lawsuits over the devices in recent years, including with Alphabet Inc.’s Google, Cisco Systems Inc. and Dish Network Corp.

Rovi, with a market value of about $1.4 billion, relies on licensing revenue from its on-screen TV guides and has recently fought Comcast Corp., Amazon.com Inc. and Netflix Inc. over patent-infringement claims. The Santa Clara, California-based company, formed through the 2008 merger of Macrovision and Gemstar, is one of the largest owners of patents for digital entertainment devices.

TiVo, founded in 1997, once was the default verb to describe the act of digitally recording TV. The company has been striking deals to supply set-top boxes or license its technology to cable and satellite-TV operators as it tries to tap into more U.S. TV households.

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