Being a shareholder in Pace has sometimes been profitable – but mostly not – and it has rarely been dull. Now the Yorkshire-based STB maker is bidding for the Motorola STB business that Google would like to offload following its buy of the mobile business.
For a company that was earlier this year on its uppers – badly handled results announcements, and ropey supply chain management exposed by the disruption of flooding in Thailand – this is some bounce back. However, it should be remembered that at the time it stumbled, Pace was in the middle of what was sold then as its latest renaissance after years of under-performance. This company is the comeback kid that keeps dropping the ball.
If it succeeds in buying the Moto business, the price will doubtless dwarf Pace’s £600 million market cap, making it a reverse takeover and, therefore, requiring this week’s suspension of its shares.
A few questions arise.
Pace does have some new management at the top since the shambles of late 2011 and early 2012. But, while there is no doubting the vaulting ambition of Allan Leighton the chairman, whose track record includes Asda but also Leeds United, has this team really proved themselves capable is integrating an overseas based worldwide business much bigger than themselves?
If the value of the Motorola STB business is clear – to Pace or anyone else – why are the valuations put forward by banks and analysts so disparate; from $1 billion to $2.5 billion – that’s a hell of a spread?
If the value of being the world’s biggest (by far) STB maker is so clear (if the deal comes off), why has Pace recently expressed an entire corporate philosophy based on moving to a service model?
If the value of being in the STB business at all is clear, why is Google – widely acknowledged as not the dumbest of companies – relaxed about shedding it and banking money it doesn’t need, despite undeniable ambition to play a major part in ‘future TV’ development and delivery.
All in all if I were a shareholder my hope would be Pace is only in this to make sure a rival – Cisco or Technicolor – pays a very full price. My fear would be it actually wants to win.