Macrovision wants to allow consumers to call up information about TV shows, view personal photos or access music libraries on a variety of electronic devices through a combination of its security software and GemStar-TV Guide's programming data.
"There is a transformation of home entertainment going on and we want to give consumers the ability to find information quickly and easily across a variety of devices," Macrovision chief executive officer Fred Amoroso said.
The executive did not disclose plans for Gemstar-TV Guide's print operations, saying he would need time to understand that business before making decisions. "I don't have a deep background in that area," he said.
A press release announcing the sale did not specifically mention TVG, or its intentions for the horse racing network.
Macrovision shares tumbled 20%, or $5.22, to $20.77 at the open of trading Dec. 7. Gemstar shares fell more than 9%, or 55 cents, to $5.43.
The company's flagship magazine has struggled with falling circulation and advertising revenue as viewers increasingly access programming data through their TV sets or online.
Gemstar-TV Guide shareholders will receive $6.35 in cash or 0.2548 of a share of common stock in a new holding company that will own both Gemstar-TV Guide and Macrovision. The cash component of the deal won't exceed $1.55 billion.
The $6.35 per share value represents a premium of 6.2% to the Gemstar closing price Thursday, and is 25% above Gemstar's closing price before it announced a strategic alternatives review July 9.
In a filing with the Securities and Exchange Commission, Macrovision said it will raise $800 million of new debt to finance the acquisition, and said JP Morgan and Merrill Lynch have agreed to commit funds.
The board of the Los Angeles-based television media company has unanimously approved the transaction, which is expected to close by early second quarter 2008. Rupert Murdoch's News Corp., which owns about 41% of Gemstar-TV Guide, has agreed to vote in favor of the deal.
Macrovision stockholders will continue to own one share in the new company for each share held at closing. When the deal is completed, Macrovision shareholders will own about 53% of the combined company, and former Gemstar-TV Guide stockholders will own 47%.
Amoroso will continue as president and chief executive of the new company. Macrovision's chief financial officer James Budge will serve as CFO. The new board will include four directors designated by Macrovision, and three chosen by Gemstar-TV Guide.
Gemstar-TV Guide CEO Rich Battista and CFO Bedi Singh will leave when the deal closes.
JPMorgan served as financial adviser to Macrovision and UBS Investment Bank as financial adviser to Gemstar-TV Guide International.
Santa Clara, Calif.-based Macrovision has about 760 employees and reported revenue of $248 million for fiscal 2006. Gemstar-TV Guide, with about 1,600 workers, posted 2006 revenue of $571 million.