Roxio said on Tuesday it would pay $32.8 million in stock for Canada's MGI Software Corp. (MGI.TO) to expand its product line of software that edits digital photos and video, and take advantage of growth in digital photography. Roxio, which makes Easy CD Creator and Toast, said it would pay about 75 cents, or C$1.18, for each MGI share by way of a share exchange that will see the issuance of 2.3 million Roxio shares or 0.5269 Roxio shares per MGI share. MGI, which makes PhotoSuite and VideoWave, has seen its shares deteriorate from the C$2 level, after saying on Nov. 28 that it was in talks to be acquired. The shares closed at C$1.05 on the Toronto Stock Exchange on Monday, or less than one-tenth of a year high of C$11.75.
Both companies' boards have voted in favor of the transaction, which could close within 90 days, said Roxio and MGI in a joint statement.
``This transaction is highly synergistic from both a product portfolio and marketing, and distribution standpoint,'' said Chris Gorog, Roxio's chief executive, in a statement. ``In addition to the nearly 100 million customers already using Roxio and MGI software, this provides us with a great base to continue to broaden our business,'' he added.
Roxio and MGI sell their software through large retailers including Best Buy and Costco, and bundle their software with digital cameras and computers sold by firms such as Dell, Compaq and Sony. Roxio said MGI will contribute $25 million to fiscal 2003 revenues and add to pro-forma earnings. As part of the deal, Roxio is extending a $1.5 million line of credit to MGI to fund continuing operations. The total purchase price in shares will be adjusted if MGI takes advantage of the loan.