SeaChange to be acquired by Partner One


SeaChange International, Inc. (OTC: SEAC) (“SeaChange” or the “Company”), a leading provider of video delivery, advertising, streaming platforms, and emerging Free Ad-Supported Streaming TV services (FAST) development, has entered into an asset purchase agreement (the “Purchase Agreement”) under which an affiliate of Partner One, one of the fastest-growing software conglomerates in the world, will acquire substantially all of SeaChange’s assets related to its product and services business (the “Asset Sale”), and will assume certain liabilities, for a purchase price of $30 million, less SeaChange’s cash and cash equivalents at closing (the “Closing”).

SeaChange has traditionally supported clients’ Operator TV systems, Advanced Advertising insertion platforms, the StreamVid streaming enablement solution, and the Xstream FAST channel service platform. The Company currently expects the transaction will result in net proceeds to SeaChange of between $13-15 million upon Closing.

The Asset Sale, which has been approved by SeaChange’s Board of Directors (the “Board”), is subject to various terms and closing conditions, including approval by a majority of the shares of SeaChange’s outstanding common stock. Subject to such closing conditions, the Closing is expected to occur in the first quarter of SeaChange’s fiscal year 2025.

“As previously reported, SeaChange has been active in evaluating its strategic alternatives to increase the scale of its technology platforms and leverage its software engineering teams, and we could not be more excited to partner with a world-class organization like Partner One for this journey. Our decision to monetize our product lines and sell our assets to a much larger and more experienced software company, like Partner One, is very positive news for our customers and is expected to generate new opportunities for our customers and teams,” said SeaChange’s Chief Executive Officer, Chris Klimmer. “With Partner One’s acquisition of these assets, SeaChange will be able to enhance its offerings to customers and continue to win market share in the dynamic PayTV, Video advertising and streaming markets.”

“We are thrilled to welcome SeaChange’s renowned streaming and advertising technology into our portfolio. SeaChange’s track record of innovation and customer satisfaction aligns perfectly with our mission to empower businesses with market-leading technologies and impeccable service. Leveraging Partner One’s financial strength and the collective expertise, SeaChange’s technology will continue to drive success and profitability for operators, broadcasters, and content owners worldwide,” emphasized Nick Riuma, Principal at Partner One.

Following the Closing, the Company will retain its cash and cash equivalents, and U.S. and state net operating loss carryforwards (“NOLs”), which may be available to offset future tax income.

The Purchase Agreement provides that, during the period beginning on the execution date of the Purchase Agreement and continuing until 11:59 p.m., New York City time, on April 8th, 2024, SeaChange and its subsidiaries have the right to, directly or indirectly: (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an offer or proposal that constitutes, or could reasonably be expected to lead to, an acquisition proposal and (ii) enter into discussions or negotiations with any person concerning a possible acquisition proposal; provided however, SeaChange and its subsidiaries will not disclose any non-public information about Partner One or the Asset Sale and related transactions, without prior written approval of Partner One. There can be no assurances that the solicitation of such possible acquisition proposals will result in a Superior Proposal (as defined in the Purchase Agreement). It is not anticipated that any developments will be disclosed with regard to this process unless the Board makes an affirmative decision to proceed with a Superior Proposal. In addition, SeaChange may, subject to the terms of the Purchase Agreement, respond to unsolicited, bona fide, written alternative acquisition proposals. The Purchase Agreement also contains a $1 million termination fee payable to Partner One in connection with the termination of the Purchase Agreement under certain circumstances, such as consummation of an alternative acquisition transaction in connection with a Superior Proposal.

In addition, concurrently with the execution of the Purchase Agreement, a significant stockholder (the “Significant Stockholder”) of the Company, that cumulatively owns 30.5% of the shares of SeaChange’s outstanding common stock, has entered into a voting agreement with Partner One pursuant to which the Significant Stockholder has agreed, subject to the terms and conditions therein, to vote its shares of common stock of the Company to approve the Asset Sale at the SeaChange special meeting of stockholders.

Needham & Company, LLC is acting as exclusive financial advisor to SeaChange in this transaction, and K&L Gates LLP is acting as legal counsel to SeaChange in this transaction.

Other News—Suspension of the Tax Benefits Preservation Plan to Protect Tax Assets
As disclosed earlier, on August 16, 2023, SeaChange approved and adopted a Tax Benefits Preservation Plan (the “Rights Agreement”), by and between the Company and Computershare Trust Company, N.A., as rights agent. The Board adopted the Rights Agreement to reduce the likelihood that future acquisitions of SeaChange common shares would result in an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended, thereby limiting the Company’s ability to use its NOLs to reduce the Company’s potential future income tax obligations. On March 7, 2024, the Board approved a suspension of the Rights Agreement; however, the Board, in its sole discretion, may reinstate the Rights Agreement.

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