Espial Group Inc. has closed its acquisition of California-based competitor Kasenna Inc.

Ottawa-based Espial, which makes middleware and applications for Internet protocol television (IPTV) said it had completed its buy of the Sunnyvale, Calif. company in exchange for 4,722,224 shares, or roughly $5.9 million.

The two companies signed a definitive agreement less than two weeks ago, on June 30.

Espial said the acquisition would make it a "global market leader to operators offering video services."

"With this combination, we've created a leading TV software company that service provides worldwide can trust," said Espial CEO Jaison Dolvane in a statement. "Our service provider customers are looking for a partner that they can rely on to help execute on their video plans in the coming years. Together, the Kasenna and Espial team will provide an unmatched level of experience and video expertise in the industry."

The acquisition will add Kasenna's Mediabase video-on-demand (VoD) software – ranked the top IPTV VoD product by MRG in 2007 – to Espial's portfolio of solutions which allow service providers to control and manage the IPTV services that go out to customers.

As well, the combined company will now have a presence with more than 100 customers worldwide and more than 2.4 million IPTV licences in deployment for one or more of the two companies' products.

The deal could help the two small companies survive in an emerging market which has grown much more slowly than expected, resulting in weak first-quarter results for Espial which saw revenues nearly halved to $1.3 million.

"The integration, deployment and subscriber ramp for IPTV has proven more difficult than initially expected, and as such is taking longer than previous forecasts," Mr. Dolvane had said at the release of Espial's first-quarter results.