BOSTON - SeaChange International, Inc. (OTC: OTC:SEAC), a provider of video delivery and advertising technology, has agreed to sell most of its assets to Enghouse Systems Limited (TSX: TSX:ENGH) for $39 million, with the net proceeds expected to be between $21 to $23 million. The transaction, subject to stockholder approval and other closing conditions, is anticipated to close in early May 2024.
The asset purchase agreement, which has been approved by SeaChange's Board of Directors, will see the transfer of SeaChange's product and services business to Enghouse, a global provider of communication technology solutions. This move comes after SeaChange terminated a previous agreement with Partner One on April 23, 2024, due to Enghouse's superior proposal.
A significant stockholder of SeaChange, holding approximately 30.5% of the outstanding common stock, has entered into a voting agreement with Enghouse, committing to approve the asset sale at a special stockholders' meeting scheduled for April 26, 2024.
SeaChange expects to retain its cash and cash equivalents, as well as U.S. and state net operating loss carryforwards (NOLs), which may be used to offset future taxable income. If the agreement with Enghouse is terminated under certain conditions, SeaChange will owe a termination fee of $1.3 million.
The special meeting of stockholders was initially convened on April 22, 2024, and adjourned to allow stockholders time to consider new disclosures related to the Enghouse transaction. SeaChange plans to post a new proxy supplement on April 24, 2024, detailing the material differences between the Enghouse asset sale and the terminated Partner One transaction.
Needham & Company, LLC is serving as the exclusive financial advisor, and K&L Gates LLP as legal counsel to SeaChange for this transaction.
SeaChange, with nearly three decades in the industry, provides video streaming, linear TV, and advertising technology globally. Enghouse, a Canadian software company, is known for its enterprise solutions across various sectors.
This sale is part of a forward-looking statement and remains subject to approval and satisfaction of closing conditions. The information is based on a press release statement from SeaChange International, Inc.
InvestingPro Insights
As SeaChange International, Inc. (OTC: SEAC) enters into an asset purchase agreement with Enghouse Systems Limited, investors are closely monitoring the company's financial health and stock performance.
According to InvestingPro data, SeaChange has a market capitalization of $11.1 million USD, which reflects its size in the market. Despite not being profitable over the last twelve months, the company holds more cash than debt on its balance sheet, a positive sign for financial stability. This is particularly relevant as the company expects to retain its cash and equivalents post-transaction.
InvestingPro Tips highlight that SeaChange is trading at a low Price / Book multiple of 0.36 as of the last twelve months ending Q1 2024. This could suggest that the stock is undervalued compared to the company's net assets, potentially offering an attractive entry point for value investors. Moreover, SeaChange's stock has experienced a strong return over the last three months, with a 54.55% price total return as of the current date. This recent performance may be of interest to momentum investors.
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