Pace increased its first half profits by 46% on the back of a 12.9% rise in volume shipments. Announcing its results for the six months ending June 30, 2010, the world number one supplier of pay-TV set-top boxes signalled a further step into the residential gateways market with a proposed £308 million (€367 million) acquisition of 2Wire Inc.
Shipments of 9.6 million units included new customers Multichoice, M7, Sky Deutschland and Astro, delivering pre-tax profits of £45.4 million.
“These results were produced despite some challenges within the supply chain, due to the skill of our operations teams, scale and strong supplier relationships,” said Pace CEO Neil Gaydon. “With today’s announcement of our proposed acquisition of 2Wire, we expect to widen out our US customer base and opportunity as well as develop Pace’s technology capability.”
With a medium term operating margin of 8% now in sight, Pace has raised its expectations for the second half of the year, anticipating “at least mid-single digit over the medium term”.
The move for 2Wire is designed to widen the company’s US customer base follows the earlier acquisition of the Paris-based IP and cable gateways specialist of Bewan Systems SA. Pace says that the proposed acquisition will strengthen the development of its home entertainment convergence strategy while taking it into the telco market.
2Wire is currently owned by a consortium including Alcatel-Lucent, AT&T, Telmex, and Oak Investment Partners. Its ten-year relationship with A&T means that at a stroke Pace will become the number one provider of telco residential gateway devices in the US and the number three globally.
The Acquisition is conditional on shareholder approval from both Pace and 2Wire, certain regulatory consents and finalisation of Pace’s bank financing arrangements
