OpenTV faces serious challenges that will impact on revenues and margins if they are not addressed, so says Kudelski in a robust response to the OpenTV Special Committee, which this week rejected Kudelski’s $127 million offer to buy out the middleware provider’s minority shareholders.
The Swiss security and CA provider has terminated discussions with the Special Committee and says it intends to aggressively pursue its objectives, claiming it has the support of a number of OpenTV clients and shareholders.
In a statement, Kudelski expressed disappointment at the response of the Special Committee, saying the rejection was not in the best interests of shareholders, customers, partners and employees. The committee’s assessment relied exclusively on an overly optimistic outlook of the company’s prospects. “The Special Committee’s assessment does not adequately take into account the impact of the market trends towards next generation set-top box software solutions, and the resulting significant decrease of OpenTV’s business volumes in a stand-alone scenario.”
While acknowledging the value of the OpenTV customer base and human capital, Kudelski said it was vital for the long term development of the OpenTV business to “significantly ramp up investment”, even at the expense of profitability in the short term.
Commenting for the first time on the Discovery Group’s April 2 description of the $1.35 per share offer as “egregiously inadequate and “predatory.” It said the analysis of OpenTV’s largest independent shareholder was unrealistic and failed to acknowledge the contribution of Kudelski towards OpenTV’s turnaround.