Pace to Pick Up Philips Set-Top Unit

1/04/2008 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.

Want to read more stories like this?
Get our Free Newsletter Here!