Kit Digital will acquire ioko, the digital media systems integrator, in a deal worth almost $80 million. This follows its acquisition of Polymedia, based in Milan, having already announced the acquisition of KickApps, Kewego and Kyte earlier this year. The company calls its approach “aggressive humility” — seeking to consolidate in areas where it can benefit from adding capabilities or joining forces with potential competitors. The expanded company expects to turnover around $210 million in 2011.
Based in Prague, Kit Digital, previously known as ROO Group and now listed on NASDAQ, offers online services for more than 2,000 clients in over 40 countries, including a number of well-known brands and media companies. It aims to be a market leader in what it terms video asset management software and related services, which it markets through a software platform it calls VX-one.
Kit Digital has been buying a number of companies as part of a rapid expansion programme. Last month it announced the acquisition of Polymedia, an online video platform company based in Milan, for $34 million. Earlier in the year it picked up KickApps, Kewego and Kyte for a total of around $77 million. Previous acquisitions included Narrowstep, Nunet, The FeedRoom, and Multicast Media.
With extensive experience in designing, developing and deploying digital media systems, ioko has built platforms for leading brands including AT&T, BBC, Channel 4, Disney, FilmFlex, Foxtel, ITV and Sky. The company turns over around $54 million a year through a combination of managed service and maintenance fees, professional services and software licences. It has around 380 employees and full-time contractors, with offices in York, London, San Diego, Malaga and Sydney.
After adjusting for $28 million in cash and working capital on the books at ioko, Kit Digital will pay over $63 million in cash and a further $17 million in shares for the company, with additional performance-based earn-outs and retention payments of up to $16 million payable in stock.
A number of ioko executives will join the management team of Kit Digital, including Mark Christie, Scott Sahadi, Allan Dunn and John Griffin.
“This transaction represents the culmination of a three-plus year dedicated process to achieve global scope and market share in the IP video platform software sector, both from a geographical and capabilities perspective,” said Kaleil Isaza Tuzman, the chairman and chief executive officer of Kit Digital.
“Today’s transaction is clearly transformative from a revenue perspective, but also dramatically expands our capacity in regard to the most ‘industrial-grade’ IP video deployments,” said Alex Blum, the chief operating officer of Kit Digital, formerly chief executive of KickApps.
“Kit brings a global portfolio, field credibility and financial resources that we expect will accelerate our sales, and the Kit platform will enable us to provide a broader product set for multi-screen functionality to our current clients,” said Mark Christie, the joint global chief executive of ioko365 Ltd.
Scott Sahadi, chief executive officer for ioko in North America, said: “As an established provider of these complex OTT managed services, we will help accelerate Kit digital’s expansion in this direction and fundamentally change the playbook in North American media consumption and delivery.”
Kit Digital will have regional bases in New York, London and Beijing, retaining an overall operational headquarters in Prague.
After developing the first incarnation of the BBC iPlayer, ioko went on to provide online video platforms for Sky, Channel 4 and ITV, developing the platform for Project Kangaroo, subsequently acquired by Arqiva and launched as SeeSaw. In the United States, AT&T engaged ioko to build and manage its U-verse online platform. Two further large-scale deployments in America have been begun but are yet to be announced.
For many years, informitv provided strategic marketing support for ioko, helping to position the company in the digital media space and developing its marketing collateral, including its strapline: “Digital Vision. Delivered.”