Rimage Corp. acquiring California-based Qumu Inc.

Eden Prairie-based Rimage Corp., a provider of on-demand CD, DVD and Blu-ray disc publishing systems, said Monday it has agreed to acquire video communications firm Qumu Inc. in a cash-and-stock deal valued at $52 million.

The deal consists of $39 million in cash and 1 million shares of Rimage common stock.

Privately held Qumu, based in San Bruno, Calif., had $10.3 million in revenue during 2010, is on track for $15 million in revenue for 2011 and is expected to generate annual revenue of $21 million by 2012, Rimage said in a statement.

"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 chief executive officer of Rimage.

Investors were not as excited about the deal. On a day when broader stock indexes rallied more then 3 percent, Rimage shares tumbled 10.4 percent to a 52-week low of $11.50.

Taking the acquisition into account, Rimage expects 2011 revenues of $86 million to $88 million and earnings per share of 42 cents to 45 cents. The company also increased its dividend by 70 percent to 17 cents per share.

The deal comes at a time when merger and acquisition activity nationally has been increasing. The recently completed third quarter showed a 32 percent increase in the number of announced deals in the United States and 14 percent increase in dollar value of those deals.

Deals among Minnesota firms, either as buyers or sellers, also have been increasing.

According to data from Bloomberg, in the first three quarters of 2011 there have been 241 deals involving Minnesota companies compared with 223 deals in the first three quarters of 2010. Activity in each of the first three quarters of 2011 and 2010 was above the total deals by Minnesota companies in 2009, when just 221 Minnesota companies were involved in deals for the entire year.