International Datacasting Corp. (TSX:IDC) has a deal to sell its broadcast products business for US$4.1 million cash to a private California-based company with a complementary lineup of technology.
Pico Digital Inc. of San Diego, Calif., will also provide US$1 million in bridge financing to the Ottawa-based technology company.
The definitive agreement includes IDC's product portfolio, customers and supplier relationships, but does not include certain assets, like intellectual property.
In a release issued Wednesday, IDC said its board of directors’ strategy committee is continuing to “explore the company's alternatives” for the excluded assets.
Pico said the two companies have highly complementary product portfolios for data broadcasting, audio distribution and digital cinema.
A majority of IDC's employees are also expected to join Pico Digital, which will have offices in the United States, Canada, Mexico and other Latin American countries, Taiwan, Japan and the Netherlands.
“Pico is not acquiring the IDC business just for customers or product. They’re excited by the team and I think many of the team will join Pico Digital,” IDC CEO Doug Lowther said, adding it was too early in the integration process to know exactly how many would join the San Diego-based company.
Pico has facilities around the world but the acquisition marks the company’s entry into Canada. Mr. Lowther said there are no short term plans to move out of IDC’s current west-end facility.
“Their intent is absolutely to have a facility in Ottawa and have a significant number of people here in Ottawa,” said Mr. Lowther, who will stay with IDC throughout the transition. He recently accepted the CEO position with media software developer Irdeto.
"IDC has been at the forefront of innovation in the satellite industry for many years," Pico CEO Ian Lerner said in a statement. "We are very excited to add IDC's product portfolio to our line-up of market leading solutions."
IDC announced in February that it was in talks to sell its business.
If it receives a better offer for all or almost all of its assets, or for 90 per cent of the company’s outstanding shares, Pico will have the right to match the deal for seven days. If it declines, IDC may pay US$200,000 to terminate the deal and accept the superior offer.
Mr. Lowther said he doesn’t anticipate that will happen and that the board is recommending shareholders accept the deal, which is expected to close before the end of June.
He said the deal was also good news for IDC customers.
“They will immediately be offered a broader range of solutions, supported by an even stronger worldwide team," Mr. Lowther said.
Based on its Tuesday closing stock price, IDC had a total stock market value of about C$3.6 million.