Inside Secure To Acquire Verimatrix


FRA: Inside Secure has announced that it is to acquire Verimatrix for US$143 million. 
Verimatrix which employs more than 300 people in 20 countries, with most significant operations in California and in Germany, is a global independent leading software security provider for video services whose security solutions are recognised for comprehensive multi-network support and maintaining end-to-end service integrity. Verimatrix helps to reduce the cost and complexity in the current content delivery processes.
The company extends its technical innovation for video providers by offering a comprehensive data collection and analysis platform for automated real-time quality of experience (QoE) optimisation that drives security performance monitoring, user engagement and content monetisation. 
The transaction leads to the creation of a trusted global powerhouse in software-based security with significant penetration of the Entertainment market, positioned to capture a well-established, but still fast-growing, demand for security solutions in the context of a major shift towards software and cloud-based security solutions; growth of demand for big data analytics solutions in a landscape of multi-device and multi-format video consumption; and content owners’ and service operators’ increasing anxiety to protect their digital revenue and profit margins. 
The combination also offers Inside Secure a unique value proposition within the Entertainment security market, enabling content providers and service operators to manage complex video security challenges leveraging a platform addressing the entire ecosystem’s multi-network requirements; a software-centric position in the fastest growing segments within the digital content protection market; a broad-based solution architecture that stretches from silicon IP through rights arbitration and tracking; a diversified client portfolio with Verimatrix solutions deeply entrenched and trusted by Hollywood studios and other content owners globally; and an opportunity to expand value in customers deploying integrated multi-device video solutions. 
Beyond the Entertainment market, the combination provides foundations to accelerate penetration of other growth verticals that face a critical security challenge, notably IoT and Connected Cars, by leveraging a high-integrity device credential management platform and enabling comprehensive, end-to-end security technology and services offerings in such application verticals. Additionally, the transaction will enable Inside Secure to tackle opportunities in advanced cloud-based analytics beyond the Entertainment market. The company will maximise the value of data analytics technologies across all its markets to provide its customers with real-time visibility over security performance (e.g., threat and attack detection and analysis) and user behaviour. 
The contemplated transaction affords Inside Secure the ability to take advantage of significantly greater reach and scale. 
The combined entities would have generated $119 million in adjusted revenue and $21.5 million in EBITDA in 2017 on an IFRS pro forma basis. The new group will benefit from its new scale and leverage the Verimatrix resilient revenue base and from the mix of both recurring and repeat revenue from both companies. 
Leveraging a strong technology and product portfolio, as well as a complementary customer base, the combination of both companies will generate multiple up-selling and cross-selling opportunities while benefiting from economies of scale. Furthermore, Inside Secure anticipates $10 million cost synergies per year on a run rate basis, once fully implemented, representing 10% of combined operating expenses base due to economies of scale with development teams, suppliers, ecosystem partners and device-provisioning costs; and general & administrative optimisation that takes advantage of the combined scale, rationalisation and streamlining of the organisation. 
Tom Munro, CEO of Verimatrix, Inc., (pictured) said: "This transaction allows a great combination of technologies and expertise, bringing two well-respected market players together. It's exciting to create a company with such a clear focus, a global presence, and a depth of expertise in the applications of security and analytics across critical market segments."
Commenting on the proposed transaction, Amedeo D'Angelo, Chairman and CEO of Inside Secure, said: "Over the years, we have built a unique position to bring security at the heart of connected devices and apps with a leading position in the OTT video services market. Verimatrix has become a key player in software-based security for Entertainment content management through its scalable and comprehensive platform with a deep expertise in cloud-based data analytics and intelligence on security performance and video users’ behaviours. 
“In this context, I’m very pleased to move ahead with the project to acquire Verimatrix which is the perfect fit to strengthen scale and reach of our value proposition in end markets that are fast shifting towards software and cloud-based security solutions while video content consumption is becoming multi-device and multi-format. We are looking forward to combining both businesses to offer our clients the best value proposition in security, starting with entertainment and moving towards Internet of Things and Connected Cars, and to continue to create value for our shareholders.” 
Further information regarding the exclusivity agreement can be read here
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