SOURCE: KIT digital, Inc.

KIT digital, Inc.

March 16, 2011 10:29 ET

KIT digital Acquires Polymedia, Strengthens Network Operator and Broadcaster-Focused Solutions

Polymedia Reinforces KIT's Leadership in Europe, Middle East & Africa

PRAGUE, CZECH REPUBLIC and MILAN, ITALY--(Marketwire - March 16, 2011) - KIT digital, Inc. (NASDAQ: KITD), a premium provider of video asset management software and related services (VAMS) for multi-screen and socially-enabled video delivery, has signed a definitive agreement to acquire Polymedia for a net consideration of $34.4 million, plus certain limited performance-based earn outs. All currency figures herein are presented in U.S. dollars.

Based in Milan, Italy, Polymedia is the IP video platform-provisioning subsidiary of TXT e-solutions, a public company listed on the Italian Stock Exchange (TXT IM).

As a standalone entity, Polymedia operates profitably and is expected to initially contribute approximately $19 million in annualized revenue, derived primarily from software licenses, software maintenance fees, and professional services. KIT digital management expects the Polymedia acquisition to be accretive.

Polymedia brings to KIT digital more than 10 years of experience in providing major network operators, broadcasters, media portals and industrial enterprises across Europe, North Africa and the Middle East with large-scale IP video platform solutions that manage the entire lifecycle of video content from acquisition to distribution, with particular expertise in metadata-related workflow and deep third party software integration. Polymedia's approximately 90 clients include Telecom Italia, Mediaset, Sky Germany, RAI, Telecinco, FastWeb, Vodafone Italia, RCS, Ericsson and Belgacom.

"We are currently witnessing a multi-industry sprint to own the relationship between the consumer and their premium content source," said, KIT digital's chairman and CEO, Kaleil Isaza Tuzman. "The ability to derive revenue from media content is becoming increasingly important as the network operator sector experiences rapid changes in device types, consumer behavior, delivery infrastructure and publishing points. As traditional broadcast technology shifts to narrowcasting, cloud-based infrastructure and file-based workflow, the competitive barriers between MSOs, telecoms operators and large broadcasters are dissolving. This presents a unique opportunity for KIT digital and Polymedia to provide major players in the market place with the type of industrial-grade content management platforms they need to manage and monetize premium content on a large-scale basis -- on either a subscription or on an advertising-supported basis."

In consideration for 100% of Polymedia's shares on a debt-free and cash-free basis, the transaction includes guaranteed payments of approximately $34.4 million at closing, comprised of $17.2 million in cash and up to $17.2 million in KIT digital common stock. The transaction is expected to close in approximately 30 days, pending review by Italian labor authorities. KIT digital is obligated to register the shares received in consideration for the acquisition under an S-3 registration statement as soon possible after closing, and retains the right to pay any portion of the stock consideration in cash at its sole election for a period of approximately 90 days from the date of closing of the transaction. A certain additional amount will be paid in cash as an offset against positive working capital at closing, and the transaction includes up to $4.2 million of KIT digital common stock or cash, at KIT digital's election, pursuant to aggressive, corporate performance-based earn-outs at the first and second anniversary of the transaction.

Polymedia's core technology revolves around a set of proprietary tools that will allow KIT digital to more rapidly deploy its network operator and broadcaster solutions, and support various revenue models for premium IP video content. Deployments include video-on-demand (VOD) stores, subscription VOD, catch-up TV, e-commerce integrated product placement promotions, and advertising-sponsored content.

Chris Richardson, KIT digital's managing director for the network operators vertical, commented: "Polymedia's experience supporting some of the most advanced telco and broadcaster IP video deployments in the industry underlines our focus around the network operator segment as a primary driver for future growth and will further support our leading position in the European zone. Polymedia's R&D labs will strengthen our carrier-grade infrastructure and tools -- as should be expected from a supplier supporting mission-critical enterprise systems."

"We are excited to join the largest and most dynamic company in the IP video asset management sector," said Polymedia's general manager, Tullio Pirovano. "KIT brings an industry-leading profile, global reach and a series of powerful, complementary capabilities to our customer base -- including best-in-class mobile video publishing and social media authoring tools. Many of our clients have been asking for these functional additions."

Polymedia, headquartered in Milan, has a total full-time staff of approximately 150, plus 70+ occasional contractors.

Polymedia adds a seasoned management team that has operated together for many years, with a similar hard driving, entrepreneurial culture to KIT digital. Key additions to KIT digital's management team include Pirovano, as well as Polymedia's operations director, Leandro Vitali, R&D director, Giorgio Tornielli, and sales director, Oliver Botti. Pirovano, Vitali, Tornielli and Botti will be assuming senior roles within the combined company.

Following the completion of the acquisition anticipated for late April, including payment of deal-related fees and charges, and payments of net positive working capital adjustments, KIT digital expects to have approximately 39.3 million common shares outstanding and approximately $90 million in cash and equivalents.

About Polymedia
Polymedia is the IP video platform-provisioning unit of TXT Group, an Italian public company. Headquartered in Milan, Polymedia services major network operators, broadcasters and media portals and corporate enterprises that require end-to-end content lifecycle management, specific workflows around metadata and deep third party integration. For additional information, visit http://www.txtgroup.com/polymedia/int/index.shtml.

About KIT digital, Inc.
KIT digital (NASDAQ: KITD) is a premium provider of end-to-end video asset management software and related services. The KIT Platform, the company's cloud-based solution, enables enterprise, media distributor and network operator clients to produce, manage and deliver multi-screen video and social engagement experiences to audiences wherever they are. The application of the KIT Platform ranges from end-consumer focused video distribution to internal corporate deployments, including corporate communications, human resources, training, security and surveillance. KIT digital's global client base includes approximately 2,000 customers across 40+ countries, including Airbus, American Express, The Associated Press, BBC, Best Buy, Bristol-Myers Squibb, Disney-ABC, ESPN Star, FedEx, General Motors, Google, Hewlett-Packard, Home Depot, IMG Worldwide, MediaCorp, Microsoft, MTV, NBC Universal, News Corp, Telefonica, Verizon, Vodafone and Volkswagen. KIT digital is operationally headquartered in Prague, and maintains principal offices in Atlanta, Beijing, Boston, Buenos Aires, Cairo, Cambridge (UK), Chennai, Cologne, Delhi, Dubai, Kolkata, London, Los Angeles, Melbourne (Australia), Mumbai, New York (executive office), Paris, San Francisco, Singapore, Sofia, Stockholm, Taipei and Toronto. For additional information, visit www.kitd.com or follow the company on Twitter at www.twitter.com/KITdigital.

Important Cautions Regarding Forward-Looking Statements
This press release contains certain "forward-looking statements" related to the businesses of KIT digital, Inc., which can be identified by the use of forward-looking terminology, such as "believes," "expects", "plans," "intends," "anticipates" and variations of such words or similar expressions, but their absence does not mean that the statement is not forward-looking. Such forward-looking statements involve known and unknown risks and uncertainties, including uncertainties relating to product development and commercialization, the ability to obtain or maintain patent and other proprietary intellectual property protection, market acceptance, future capital requirements, regulatory actions or delays, competition in general and other factors that may cause actual results to be materially different from those described herein. Certain of these risks and uncertainties are or will be described in greater detail in our public filings with the U.S. Securities and Exchange Commission. KIT digital is not under obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

Contact Information

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    KIT digital Investor Relations Contact:
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