VeriSign sells Jamba stake to News Corp
NEW YORK (Reuters) - News Corp has taken full ownership of mobile content provider Jamba by buying VeriSign Inc's 49 percent stake for about $200 million, the two companies said on Tuesday.
Jamba makes content such as wallpapers, ringtones and games for mobile phones. It also offers short episodes -- called "mobisodes" -- of some Fox TV series, including "24," "Prison Break" and "Bones," for phones.
VeriSign has been trying to divest its slower-growing businesses to focus on its core website-naming and Internet security services. But investors have been concerned about the slow progress of asset sales.
News of the Jamba deal drove VeriSign shares up nearly 8 percent before they fell back to $24.59, which was still up more than 2 percent amid a broad market decline. News Corp shares fell 4.8 percent to $10.24.
Deutsche Bank analyst Todd Raker said in a research note that the divestiture should be slightly accretive to VeriSign's 2009 and 2010 earnings forecasts if the company uses proceeds for share repurchases, as expected.
Rupert Murdoch's News Corp bought 51 percent of Jamba from VeriSign for about $188 million in 2007, when the two formed a joint venture. News Corp combined the joint venture with its Fox Mobile Entertainment unit.
Mackinac Research LLC analyst Frederick Ziegel said VeriSign would have more difficulty selling other assets, since the Jamba deal was helped by its existing relationship with cash-rich News Corp.
VeriSign Chief Executive James Bidzos already said in August that divestitures were being hurt by the economic slowdown and would take longer than expected. Credit conditions have worsened dramatically since then.
"There's no question it's probably going to take a little bit longer to sell the businesses," said Ziegel, noting it could take about six to nine months to get that done.
In 2004, VeriSign acquired Jamba, then based in Berlin, Germany, for about $273 million. The company is now dual-headquartered in Berlin and Beverly Hills, California.
VeriSign spokeswoman Lisa Malloy said the sale of Jamba, its fifth divestiture, was an indication of its commitment to the process.
(Reporting by S. John Tilak; Editing by Steve Orlofsky, Richard Chang)
