Pace in £68m Philips deal
PACE Micro Technology will become one of the world's leading set-box makers after agreeing a £68m deal to buy the set-top box business of European electronics giant Philips.
The Saltaire company has bought the Dutch group's set-top box and 'connectivity solutions' business, which supplies satellite, cable, terrestrial and internet television components.
The deal will create a business which has global annual sales of 8.5 million boxes.
Pace will pay for the acquisition with 70 million of its shares giving Philips a 23% stake making it Pace's largest shareholder, ahead of founder David Hood.
The Philips' business employs 335 staff, mainly in France. The division is a leading designer and supplier of digital TV products including satellite, cable, terrestrial and internet set-top boxes.
Pace and Philips each have more than 20 years' experience in the digital set-top box market. Their combined operation put them in the top three worldwide, with a strong customer and product portfolio.
As part of the deal, Pace will be entitled to use the Philips brand on an agreed range of retail products for the next three years.
Pace chief executive Neil Gaydon said: “Pace and Philips' combined technologies, expertise and customer reach will create a leading centre of excellence in
the set-top box industry. There is a strong strategic fit from customer, product, geographic, culture and scale perspectives.
“We have minimal customer overlap and the combined group will have a significantly enhanced technological position.”
Both Pace and Philips had strong relationships with leading pay TV operators, Mr Gaydon said.
He said that existing management would remain in place.
The deal is latest consolidation in the set-top box sector after BSkyB agreed to buy Amstrad in a £125m deal in August.
Shares in Pace, valued at £213m, were suspended at 91.25p yesterday under stock market rules governing reverse takeovers and ahead of the announcement of the deal which is expected to be completed in April next year.
Pace, which employs 614 staff, has said it is continuing to trade in line with market expectations and remains confident in its outlook for 2007.
The company, set up in 1982 and which is celebrating its silver anniversary this year, which floated in 1996.
It made pre-tax profits of £6.1m in the year to June 2007 on revenues of £386.5m – compared with a £15.6m loss a year earlier – thanks to growing demand for digital TV and high definition products.
