Winnipeg's Novra acquires International Datacasting Corporation

Ten months after its shareholders rejected a sale to San Diego-based Pico Digital, Ottawa’s International Datacasting Corporation has found another potential partner.

The broadcast technology provider announced Tuesday it has been acquired by Novra, a Winnipeg company specializing in the transmission and reception of IP traffic over satellite, cable and terrestrial communication links.

Interim CEO Steve Archambault said he is much more confident of shareholder support this time around.

“The Pico deal offered only cash considerations with no upside,” he said. “The (Novra) purchase price consideration includes both cash and shares, and so as a result, our shareholders will have the opportunity to benefit from any potential upside post-merger.”

Under the $2-million deal, Novra would acquire all IDC shares for one cent. The company would then issue one Novra share for every 10 shares of IDC and one Novra warrant for every five IDC shares. The warrant will give IDC shareholders the opportunity to purchase a Novra share for 12 cents, an offer that will expire one year after the deal closes.

Mr. Archambault said that means IDC shareholders will end up with between 23 per cent and 45 per cent ownership of the merged company.

The deal is not just a winner for shareholders, he said, adding that Novra was very clear throughout the negotiations about how highly it valued IDC’s research and development team. That department was cut to fewer than 20 employees in February when the firm failed to close some key deals before the end of its fiscal 2016.

“The R&D side, we’re lean and mean and there certainly will be an opportunity to recall some (workers),” Mr. Archambault said, although he couldn’t yet say how many. Novra also has a term sheet with Wegener Corporation and an integration strategy session will have to be held to determine who goes where.

While the merged companies’ centre of excellence could end up in Ottawa, Mr. Archambault said the conversation was still in its early stages.

“From my perspective, it’s very positive for the R&D team,” he said.

IDC will continue to operate as a standalone company, and its customers also stand to gain from the deal, Mr. Archambault said.

“The concern whether IDC will be around to service the account very much goes away with this merger,” he said, adding the firm will also now be able to offer its customers a broader range of products.

Novra president and CEO Harris Liontas called the deal an “exciting opportunity” for the company, its customers and shareholders, saying it will lead to a “stronger balance sheet” for his firm.

“This merger, along with the pending acquisition of Wegener Corporation that was previously announced by Novra, will create a world-class company that is going to provide innovative and compelling solutions,” he said.

IDC has scheduled a shareholder meeting for May 30. Should the deal get approved, it is expected to close June 15. Mr. Archambault, who was originally set to leave the company next week, has agreed to stay on until June 15 and said he has had some discussions about whether there may be another role for him within the newly merged firm.

“I’m keeping all options open at this point. I’m not closing any doors,” he said.