(Bloomberg) — Privately held Panopto Inc. is offering to buy its Intel Corp.-backed rival, Kaltura Inc., in a deal that would value the video platform provider at $383 million.
Panopto, an education software maker owned by private equity firm K1 Investment Management, said in a letter to Kaltura’s board Thursday that it’s prepared to pay $3 a share in cash for the company, a 27% premium to Thursday’s closing price. The proposal is the firm’s third since early June, with Kaltura’s board rejecting the two previous offers.
Tobi Hartmann, Panopto’s chief executive officer, said the premium his company is offering would be even higher if it weren’t for K1 purchasing 4.8 million Kaltura shares from July 7 to July 25, which drove up its stock price over a 13-day period. The shares, which closed July 6 at $1.72, fell 0.8% to $2.36 Thursday, giving Kaltura a market value of $301 million.
K1 now owns a 7% stake in Kaltura, according to people familiar with the matter who asked not to be identified because the information was private. That would make it a top-five holder in the company, according to data compiled by Bloomberg.
‘Driving the Future’
Panopto sees video as “driving the future of learning, work, and connectivity, globally,” Hartmann said in the letter, a copy of which was reviewed by Bloomberg News. He added that Kaltura’s management and employees would be an important part of a combined business.
A representative for Kaltura didn’t immediately respond to a request for comment.
Hartmann said that if Kaltura’s business was combined with Panopto, it would create a strong, global competitor in the video industry. Combined, the two companies could improve their overall product, audience experience and drive greater engagement from college students, employees and others, he said.
Kaltura’s shares have fallen 76% since its initial public offering last July as the company’s sales growth slowed and it continued to burn through cash. CEO Ron Yekutiel said on a conference call in May that Kaltura was facing several headwinds, including lower-than-expected sales, a reduced need for its professional services, and an undisclosed, major customer reducing its business in the first quarter. Yekutiel said he believed sales growth would pick up in the second half of the year.
‘Remain Committed’
Hartmann said Panopto’s proposal, backed financially by itself and K1, would provide Kaltura’s investors with an opportunity to realize “extraordinary value in a turbulent financial environment.”
“While we are disappointed that the board has to date decided to reject our revised proposal without engaging in a meaningful dialogue, we remain committed to pursuing a transaction between our two businesses,” he said.
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