Sonos Inc. (NASDAQ: SONOS) said Thursday it will acquire Movie Pass, a subscription service that lets customers stream movie content to their phones.
Sonos, which was founded in 2014, said the acquisition would create a digital media platform for people who don’t have access to a cable or satellite subscription to watch movies and television on their mobile devices.
Sono will pay Movie Pass subscribers $4 a month, and the company will use Movie Pass’ mobile app to stream movies to users’ smartphones, tablets and smart TVs.
Movie Pass is an online service that allows people to rent, buy, and stream content from streaming services like Netflix, Amazon Prime Video, and HBO GO.
The deal was first reported by The Wall Street Journal and Bloomberg.
The company said in a statement that it will invest $1.8 billion in the deal, which is expected to close in the fourth quarter.
MoviePass will be spun out of Sonos as a standalone company, the company said.
The acquisition comes as Sonos is ramping up its mobile services and plans to offer streaming of movies and TV shows to Android and Apple TV users.
Movie pass, which launched in the U.S. in October, allows users to rent and buy movies and shows from streaming platforms such as Netflix and Amazon Prime.
It lets users access the services via their phones and televisions.
The transaction is expected pay dividends of between 2% and 3%, according to estimates by research firm FBR Capital Markets.
Shares of Sono, which has about 20 million subscribers worldwide, rose more than 2% in after-hours trading.