Digital watermarker Digimarc (NSDQ: DMRC) has announced the sale of its ID Systems business to L-1 identity, a provider of ID and security services, for $250 million in cash and stock. The cash-stock split is roughly 50-50, depending on what happens to L-1 shares. Digimarc says the deal is designed to let it focus on its core watermarking business. Following the transaction, the “new” Digimarc digital watermarking business and the cash will be turned into a new corporation, distributed to shareholders in a tax-free manner. L-1 will invest another $5 million in this entity. Release.

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The news comes as partial rival Macrovision (NSDQ: MVSN) has also been engaged in a slimming process, designed to focus itself on core operations. Macrovision also recently sold its Digimarc stake to a PE firm.