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Gemstar buys TV Guide
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October 4, 1999: 3:01 p.m. ET
Maker of 'VCR Plus' recording technology to pay $9.2B in stock, debt
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NEW YORK (CNNfn) - Gemstar International Group Ltd., the maker of VCR-plus recording technology, said Monday it will buy TV Guide Inc. for about $9.2 billion in stock and assumed debt.
Gemstar will swap 0.6753 share for each TV Guide share, giving TV Guide shareholders a 45 percent stake of the combined company. The acquisition price gives TV Guide stockholders a more than 30 percent premium, based on Friday's closing price of 41-17/32. Gemstar also will assume $600 million of TV Guide's debt.
The agreement gives Gemstar a way to market its ventures, particularly as it expands its presence alongside the rapidly growing arena of digital television. Gemstar wants to use TV Guide's marketing prowess to sell ads for its listings, which will expand as the number of stations increases. Gemstar created and licenses the technology that allows users to punch a code rather than use a VCR timer to record programs.
For TV Guide, it provides a chance to step into the electronic information age in the area of providing program listings. It also gives its investors a healthy return on their stock. TV Guide (TVGIA)'s shares surged 10-11/32 Monday, or about 25 percent, to 51-7/8. Gemstar (GMST) shares rose 2-7/8 to 86-1/2.
The agreement has been approved by both companies' boards of directors and is expected to be finalized in the second half of next year. The board has been expanded to 12 members, with six seats allocated to each company.
Gemstar Chief Executive Henry Yuen will remain CEO of the new company, which will be named TV Guide International Inc. TV Guide CEO Joseph Kiener will serve alongside Yuen as co-president and chief operating officer. 
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