Extreme Reach, Inc., a video platform for integrated TV, online and mobile advertising, has agreed to acquire the TV business of Digital Generation, Inc, including its advertising distribution business unit, for $485 million in cash.

The transaction, which is subject to approval by DGIT’s shareholders, is expected to be accomplished in two steps: DGIT will distribute its online business to DGIT shareholders in the form of a new publicly-traded company, and Extreme Reach will acquire the remaining DGIT business pursuant to a cash merger.

The acquisition is expected to be financed by a combination of existing cash, debt financing to be arranged by J.P. Morgan and SunTrust Robinson Humphrey, and new equity from existing investors of Extreme Reach. Spectrum Equity, which invested $51 million in Extreme Reach in May 2013, has agreed to invest up to an additional $47 million to facilitate the acquisition.

Under the terms of the agreement, Extreme Reach has agreed to acquire all of DGIT’s TV-centric business units, (collectively called Video Fusion) including DG’s broadcast distribution and production services businesses.

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