England’s Pace Micro Technology entered into a conditional agreement to acquire the set-top box and connectivity solutions business of Royal Philips Electronics, in a deal valued at about $135 million (95 million euros).
Pace CEO Neil Gaydon, in announcing the deal, 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,” Gaydon said, in a statement.
The Philips set-top box and connectivity business unit, which has 335 employees primarily based in France, designs and sells a range of digital TV products including satellite, cable, and Internet Protocol TV set-top boxes. Pace would have the right to use the Philips brand in retail distribution for certain products for the next three years.
The deal requires approval of Pace shareholders and is subject to other conditions. Under the terms of the deal, Philips would own approximately 22.5% of Pace’s shares upon completion of the deal.
For the year ended Dec. 31, 2006, the Philips set-top business generated revenues of €357.2 million ($514 million using current exchange rates) and had a loss of €39.3 million ($57 million). Pace said the operational performance of the Philips unit “has improved significantly during 2007,” and that the company believes there’s potential to improve efficiencies.
Pace, which is based in West Yorkshire in the United Kingdom, has more than 40 cable customers in North America, including Comcast, Time Warner Cable, Bright House Networks and Bresnan Communications.
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