KIT Digital Acquires Multicast Media Technologies

Online video provider KIT digital on Monday agreed to buy Multicast Media Technologies for about $18 million.

"Multicast complements and substantially expands our North American client base, as well as our capabilities in serving video to the 'three screens' of the mobile device, browser and IP-enabled television," said Kaleil Isaza Tuzman, chairman and CEO of KIT digital.

KIT will pay $4.9 million in cash and will also provide 1.3 million of KIT Digital shares plus the assumption of some $4.6 million in long-term liabilities, the company said in a statement today.

Last summer, KIT began trading on the NASDAQ Global Market exchange. The move, Tuzman said at the time, "puts us in a position to execute on selected, accretive acquisitions."

The company expects the acquisition to be "immediately accretive on both a revenue and cash flow multiple basis," Tuzman said.

Then known as Roo Group, KIT digital was taken over by Tuzman -- a former JumpTV executive -- in December 2007.

The name change to KIT -- an acronym that stands for "Knowledge, Imagination and Technology" -- is intended to reflect changes under Tuzman aimed at refocusing on the company's core business of providing video services to companies across the entertainment, financial, automotive and other industries.

KIT allows clients to publish, manage and distribute digital video content, as well as tap its syndicated video channels and syndicated videos for content.

Tuzman previously said a key change for the company would be to focus on delivering live streams instead of video-on-demand for third-party sites.

Atlanta-based Multicast provides services to government and non-profit and faith organizations and corporate clients, including FedEx, The Knot, and In Touch Ministries.

According to the company, it presently generates about $12 million of recurring annual licensing fees, along with some additional services revenue.

KIT also agreed to buy back about 4 million of its outstanding warrants in the first quarter. The company said it plans to use proceeds from a $15 million share sale.

KIT presently provides software to some 600 clients including Hewlett-Packard Co. and Vodafone Group Plc. The company moved its headquarters to Prague from Dubai last year.

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