Pace to Pick Up Philips Set-Top Unit1/04/2008 7:00 PM Eastern
In a deal that would double its size, the United Kingdom's Pace Micro Technology has agreed to acquire the set-top box and connectivity solutions business of Royal Philips Electronics, in a deal valued at about $135 million (or 95 million euros).
Pace CEO Neil Gaydon, in announcing the deal on Dec. 19, said the combined company would have an annual run rate of more than $1 billion in sales and would ship 8.5 million set-tops per year. He said there was “minimal” customer overlap between Pace's and Philips' set-top businesses.
“Pace and the Philips [set-top business] combined technologies, expertise and customer reach will create a leading center of excellence in the set-top box industry,” said Gaydon in a statement.
Pace, based in West Yorkshire, England, currently has more than 40 cable customers in North America, including Comcast, Time Warner Cable, Bright House Networks and Bresnan Communications.
The Philips set-top box and connectivity business unit, which has 335 employees based primarily in France, designs and sells a range of digital-TV products including satellite, cable, and Internet Protocol TV set-top boxes.
The deal requires approval of Pace shareholders and is subject to other conditions. Under the terms of the bid, Philips would own 22.5% of Pace's shares upon completion of the acquisition.
For the year ended Dec. 31, 2006, the Philips set-top business generated revenues of 357.2 million euros ($514 million at current exchange rates) and had a loss of 39.3 million euros ($57 million). Pace said the operational performance of the Philips unit “has improved significantly during 2007,” and that the company believed there is potential to improve efficiencies.