Synacor (NASDAQ:SYNC) and Qumu (NASDAQ:QUMU) have announced plans to combine in an all-stock transaction. The merger, which is expected to close in mid-2020, is intended to create a global software-as-a-service (SaaS)-based collaboration software-focused business with operational synergies and cross-selling opportunities.
This transaction has been unanimously approved by the boards of directors of both companies and is expected to close mid-2020, subject to obtaining required approval from the stockholders of both Synacor and Qumu, and satisfaction of other customary closing conditions.
The merger is intended to bring together Qumu's Enterprise Video platform with Synacor's Cloud ID Identity & Access Management platform, and the Zimbra Email & Collaboration platform. It's also intended to accelerate Qumu's go-to-market strategy via Synacor's 1,900+ channel partners and strengthen cross selling opportunities. Some $4-$5 million in annualized operating synergies are expected in the first fiscal year following closing that include overlapping public company costs and various operating expenses.
"This is a strategic and highly synergistic combination that creates operating software scale and accelerates growth," said Himesh Bhise, CEO of Synacor. "Together with Qumu, we will be a software-focused business with about $50 million of high-margin recurring revenue, positioned in the attractive collaboration product segments of email, identity, and video, with an enviable customer base that spans enterprise, small and medium business, government, service providers, content providers, and publishers. Our portal and advertising business will continue to meaningfully contribute to Synacor's top and bottom line, as we benefit from the expanded scale and scope of our software and services segment. This is an exciting day for the employees, customers, and shareholders of Qumu and Synacor."
"With Synacor having an extensive network of more than 1,900 distribution partners and an established base of more than 4,000 customers, the merger will immediately accelerate our go-to-market efforts," said Vern Hanzlik, president and CEO of Qumu. "As the demand for enterprise collaboration solutions continues to expand, we believe there will be a significant opportunity for us to position a combined email, video and identity offering to reach a much wider cross-section of the enterprise market with a scalable, highly secure and extensible solution for cloud-based and hybrid deployments."
Post close, Bhise will continue as CEO and Tim Heasley as CFO of Synacor. Hanzlik, the CEO of Qumu, will join Synacor as chief revenue officer, Software & Services.
The transaction is structured as an all-stock deal. Under the terms of the merger agreement, each share of Qumu common stock issued and outstanding as of the effective date of the merger will be converted into approximately 1.61 shares of Synacor common stock. After closing, Synacor common stock, including the shares issued in the merger, will trade on the NASDAQ under the ticker "SYNC".
Upon closing, Synacor stockholders are expected to own approximately 64.4%, and Qumu shareholders are expected to own approximately 35.6% of the stock of the combined company. The combined company is expected to have over $120 million in annual revenue on a pro forma basis.