Rimage Acquires Qumu

Rimage, provider of on-demand CD/DVD/Blu-ray Disc publishing systems, announced that it has signed a definitive agreement for the acquisition of Qumu, a provider of enterprise video communications.

The acquisition provides Rimage with a presence in the rapidly growing video communications market with an established partner, serving 100 Global 1000 customers and generating revenue growth. The purchase price totals $52 million, consisting of $39 million in cash and one million shares of Rimage common stock. The transaction is not subject to any regulatory conditions or shareholder approvals and is anticipated to close within 24 hours.

“Qumu is a cornerstone acquisition for Rimage and immediately positions us as a leader in the growing market for video communications and social enterprise applications for business,” said Sherman Black, president and CEO of Rimage Corporation. “The Qumu acquisition accelerates Rimage’s strategy to distribute live, on-demand, downloaded and optical media content for a broad range of applications, on any mobile or desktop device. This acquisition significantly expands our market to new enterprise customers and offers opportunities for cross-selling to the installed base of customers of both Rimage and Qumu.”

Qumu helps corporations create, manage and securely distribute video and related content and provides analytics on content usage. With an estimated total available market of $2 billion, it serves companies in banking, technology, and telecom, among other industries, as well as universities and government agencies. It sells its products through a direct sales force and through premier distribution partners, including Sony and AT&T.

Qumu’s revenue has increased more than 45% per year over the past three years. In 2010, it generated $10.3 million in revenue and it is on track to achieve approximately $15 million in 2011. Based on current opportunities and expectations, Qumu is expected to generate approximately $21 million in revenue in 2012.

“The Qumu acquisition provides customer and technology synergies with our disc publishing business and virtual publishing initiative,” continued Mr. Black. “We will continue to invest in disc publishing to provide our customers with the leading edge solutions they expect from us. The beta testing of our virtual publishing technology, a secure “push-based” delivery platform, continues to proceed well and we remain on track with validating the concept.”

With Qumu, Rimage will be able to provide its customers with comprehensive solutions for all content distribution applications. Qumu allows customers to reliably and securely offer their content across multiple platforms including the desktop, smart phones and tablets. Qumu customers will benefit from Rimage’s virtual publishing technology which will add secure push delivery capabilities to Qumu’s “pull-based” streaming solution. Rimage’s net free cash flow, global footprint and infrastructure will enable Qumu to accelerate its expansion into new markets.

Qumu will be integrated into Rimage. Its operations will remain in San Bruno, California. Ray Hood, president and chief executive officer of Qumu, will remain the leader of the Qumu team and will become a senior vice president of Rimage.

“We are extremely excited to be joining forces with Rimage to more quickly extend Qumu’s unique video communications solution to a much larger market,” said Mr. Hood. “We believe the combination of the two companies offers significant opportunities for growth in 2012 and beyond. Our optimism is demonstrated by the desire of our investors to take a portion of the purchase price in Rimage stock.”