TiVo-Rovi Merger Deal Ok'd, HSR Waiting Period Cut Short

The merger deal between TiVo Inc. (NASDAQ:TIVO) and Rovi Corporation (NASDAQ:ROVI) took a step ahead last Monday, with an important regulatory approval by the U.S. Federal Trade Commission and the Antitrust Division of the Department of Justice. The companies jointly announced that these regulatory bodies have granted an early termination of the waiting period for a review of the transaction under the Hart-Scott-Rodino (HSR) Act.

The HSR Act seeks to ensure due filing of all documents necessary for mergers, acquisitions and transfer of assets or securities by companies with the U.S. Federal Trade Commission and Department of Justice.

Notably, the companies inked a definitive agreement in the last week of April under which Rovi would acquire TiVo for $1.1 billion in cash and stock.

Rovi provides a set of solutions that allow businesses to protect, enable and distribute digital goods to consumers and help consumers discover and manage digital media across multiple channels. The company, formerly known as Macrovision Solutions Corporation, is focused on revolutionizing the digital entertainment landscape through its innovative offerings.

On the other hand, TiVo pioneered a brand new category of products by developing the first commercially available digital video recorder. However, over the years, the company has expanded its capabilities beyond hardware sales and patent licensing to online subscription services. Moreover, the company’s strategy of providing next-generation features, which include cloud-platform and mobile apps for cable service providers, is likely to boost revenues in the long run.

However, both the companies have been witnessing stiff competition from Internet video providers such as Alphabet’s YouTube, Netflix (NASDAQ:NFLX) , Apple (NASDAQ:AAPL) and Roku.

Apart from this, both TiVo and Rovi, which were considered to be arch rivals till now, will be able to enhance their profitability significantly through a merger. Note that, the combined company will have over 6,000 issued and pending patents offering it a competitive advantage over other media and tech giants.

Currently, both TiVo and Rovi carry a Zacks Rank #3 (Hold).