QSound Labs, Inc. Wednesday signed a letter of agreement to acquire StreamMagic, Inc. in a stock transaction valued at approximately $100 million.
Under the terms of the letter of agreement, QSound will acquire Stream Magic,
Inc. by issuing 26.5 million preferred shares for all of the outstanding
stock of StreamMagic. The acquisition is expected to close in the second
quarter.
The combination of QSound’s enhanced audio and StreamMagic’s broadband video
delivery solutions is intended to enable content publishers to deliver rich
media via the Internet in a cost-effective manner, the company said.
Immediately prior to the completion of this transaction, QSound said it plans to
spin off its non-Internet audio business segment and its e-commerce business
segment to shareholders in a new company that QSound intends to list
publicly.
“This is the first step in QSound’s previously announced plan to unlock
shareholder value by monetizing our intellectual property assets through
corporate reorganization and strategic alliances,” said David Gallagher,
president and chief executive officer.
“We believe the combination of the two
companies will have much more leverage than the sum of the two operating
independently. By combining with StreamMagic we will capitalize on
StreamMagic’s high performance Internet server management solutions and
QSound’s leading edge enhanced Internet audio to create a new generation
of streaming content.”