On December 19, 2023, Enghouse Systems (TSX:ENGH), a global provider of enterprise software solutions, announced that it has reached an all-cash agreement to acquire Qumu Corporation (NASDAQ: QUMU), a provider of cloud-based enterprise video technology, for US$18.0 million.
As per the acquisition agreement, which has been approved by both companies’ board of directors, Enghouse will acquire all the outstanding shares of Qumu for US$0.90 per share in cash, for a total equity value of around US$18 million. The offer price represents a premium of approximately 105% over the closing price of Qumu on December 16, 2022.
In 2021, Qumu booked revenue of US$24.0 million and a loss of US$16.4 million. Taking cash and debt into consideration, the implied enterprise value (EV) of the transaction is US$12.7 million and values Qumu at 0.5x EV-to-Revenue (2021).
Qumu provides video content management software and services and its software is used to create, manage, and distribute video content for a variety of industries, including corporate communications, government, and education. Qumu was founded in 2003 and is headquartered in Minneapolis, Minnesota.
Enghouse is divided into two business segments (Interactive Management Group and Asset Management Group) and provides specialized enterprise software solutions for various industries including contact centers, video communications, healthcare, telecommunications, public safety, and the transit market. Enghouse has a growth strategy that combines organic growth and acquisitions, and is funded by operating cash flows.
The Qumu board of directors, executive officers, and certain shareholders have entered into a tender agreement with Enghouse committing to tender all of their Qumu shares in the tender offer. The transaction is expected to close in February 2023.
Steve Sadler, Chairman and CEO at Enghouse, commented: “The combination of Qumu’s video creation, management, and delivery solutions with Enghouse’s video collaboration and streaming products strengthens the position of both companies in a competitive space.”
Rose Bentley, Qumu’s President and CEO added: “Just as we embraced video as the future of work, this merger allows Qumu to enhance our product innovation and the quality of our service and support. We are excited about the transaction.”
The value of this transaction does not bode well for covered company Moovly Media (TSXV:MVY) which booked revenue in 2021 of C$1.5 million, with a loss of C$2.5 million, as it is currently valued at EV-to Revenue (2021) at 19.7x.
Similar to Qumu, Moovly is a cloud-based media platform for professional-level video production for businesses, educators, and home use. Moovly focuses on providing leading-edge software that allows users to easily create professional live-action, animation, motion graphics, screenshots, or whiteboard videos without being an expert in video creation.
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