Pace in takeover talks
PACE Micro Technology today revealed it is in talks over the acquisition of a larger rival and requested its shares be suspended on the London Stock Exchange.
The Shipley-based digital TV set-top box maker said the deal, if completed, would be regarded as a reverse takeover because of the size of its acquisition target.
The company, Britain's biggest consumer electronics company in both revenue and market capitalisation, said that a further announcement would be made “shortly”.
Pace shares closed unchanged at 91.25p last night, giving the company a market capitalisation of £213.24m.
Pace, which has its headquarters in Salts Mill at Saltaire, now makes 58 per cent of its sales in the United States so a possible deal with an American rival has been mooted.
The company has deals with half of the world's top 20 pay-TV companies and supplies equipment for high-definition (HD) TV and personal video recorders (PVRs) like Sky+ in the UK.
Pace, which supplies BSkyB in the UK, saw growth in its global markets – Europe, the Middle East, Africa and Asia Pacific. According to Screen Digest, by
2010 there will be more than 228m homes worldwide with HD-ready flat panel TVs.
Shipments to the US and Canada leapt six-fold to 1.2m units in Pace's last financial year. Boxes for DirectTV and Comcast of the US, two of the world's biggest payTV operators, drove the increase.
The USA is the world's biggest market for digital television technology and a key strategy of Pace chief executive Neil Gaydon has been to focus on this.
Research from Screen Digest suggested that US homes connected to digital cable would grow by 20m to 55.5m between 2006 and 2011, while digital satellite homes would grow by 6m to 38m. American householders often have three or four digital TV boxes in their homes.
In the year to July 24 Pace saw revenues more than double to £386.5m. A pre-tax loss before exceptionals last year of £15.6m was turned into a profit of £6.1m.
Margins of 15.3 per cent in the first half improved to 16.6 per cent in the second. The market is expecting 19 per cent in the current year.
Competition between pay-TV operators and new entrants to the market like telecoms companies, who seek to provide video services over broadband, increases, will increase say analysts, helping to drive demand as rivals seek to differentiate themselves to win subscribers.
