Pace acquires Philips STB unit
December 20, 2007
Philips Electronics has reached an agreement in principle to sell its Set-Top Boxes (STB) and Connectivity Solutions (CS) businesses to UK-based technology provider Pace Micro Technology.
Philips will sell the businesses to Pace in exchange for 70 million Pace shares. Philips will retain 22.5 per cent of the enlarged share capital of Pace. The deal is classified as a ‘reverse takeover’ under the Listing Rules by virtue of its size and is conditional on the approval of Pace shareholders, the relevant regulatory authorities and Philips’ workers council. The proposed transaction values the business at up to E95.0 million (£68.0m).
The Philips STB and CS Business has long-established relationships with a number of key additional payTV operators in multiple geographies, major IPTV customers and a strong international retail business. As part of this transaction, Pace will be entitled to utilise the Philips brand in retail distribution for an agreed range of products for the next three years. The combined company will rank third in the global STB market behind Thomson and Motorola. The 2006 acquisition of Amstrad by BSkyB to develop next-generation set top box technology had been seen as putting pressure on Pace, which remains a supplier to BSkyB.
Philippe Alcaras, Business Unit leader, Philips Home Networks, said the rapidly changing dynamics of the markets in which the STB and CS businesses operated would inevitably culminate in further industry consolidation. Neil Gaydon, Chief Executive Officer of Pace said there was a strong strategic fit from customer, product, geographic, culture and scale perspectives, with minimal customer overlap giving the combined group a significantly enhanced technological position.
“The Acquisition brings capabilities in IPTV, terrestrial, retail and connectivity products, which will extend the strong position we have built through relationships with leading payTV operators. We also believe there is potential for improved efficiencies by utilising the operating model and business structure we have built at Pace over the last two years, ” he concluded.