Shares of Spyglass Inc. soared 18% on Monday after interactive TV venture OpenTV said it was acquiring the Internet consultant and wireless software company in a $2.5 billion stock swap.
Deal will enable OpenTV to reach Internet-enabled and wireless mobile devices worldwide using Spyglass’ software.
OpenTV, already a large player in Europe, is just now expanding into the U.S. marketplace through a pact with EchoStar’s Dish Network to offer its own interactive TV services similar to TiVo and ReplayTV. OpenTV will incorporate Spyglass’ Prism server-based product, which recognizes and reformats standard Web content to display it on set-top boxes, mobile phones and other non-PC devices.
Merger also will give OpenTV access to Spyglass’ customer base, which includes GTE, Microsoft, Motorola, NEC, Nokia and Sony, and the potential for additional revenue opportunities.
OpenTV is installed on more than 6.1 million digital set-top boxes worldwide and is available via British Sky Broadcasting in the U.K. and TPS in France.
“We are excited about this merger and the strong potential for additional growth,” said Cobus Stofberg, chairman of OpenTV and CEO of MIHL, a ‘Net technology group that owns 76% of OpenTV. “Interactive television and broadband Internet connectivity are rapidly becoming a reality around the world and OpenTV is now well placed to offer an exciting and complete array of software solutions and services to network operators and broadcasters.
In addition, OpenTV will build on Spyglass’ strong foundation in the mobile-phone market, where it already derives a significant amount of revenues from professional services and licensing fees related to its Prism technology.”
Stock in Naperville, Ill.-based Spyglass was up as much as 30% on Monday, but closed at $82.38, a gain of $12.50.
OpenTV, based in Mountain View, Calif., was down $39.95 to close at $129.05, a loss of 24%.
Through the deal, OpenTV will acquire all of Spyglass’ outstanding stock in a tax-free, stock-for-stock transaction. Spyglass stockholders and option holders will receive approximately 15 million OpenTV shares and own approximately 18% of the combined company’s stock.
Deal is still subject to approval of the stockholders of both companies, and is expected to close within three to four months.
America Online, EchoStar Communications, Liberty Digital, News Corp., Time Warner and Shaw Communications are investors in OpenTV.