Arris has agreed to buy Pace in a $2.1 billion stock and cash deal that puts the UK set-top company in the same portfolio as the former Motorola set-top business.
In a statement issued late Wednesday, Arris said the deal would both enhance its international presence and provide a large-scale entry into the satellite segment.
The purchase will lead to the formation of a new company known initially as New Arris that will be incorporated in the UK; operational and worldwide headquarters will be in Suwanee in the United States and listed on the NASDAQ stock exchange.
“Pace plc is a great company with a strong track record of pioneering innovation and excellent customer service. Through a combination of organic development and acquisitions, Pace has grown to be a leading technology solutions provider to the pay-TV and Broadband industries serving cable, satellite and telco customers across the globe,” said ARRIS president Bob Stanzione. “Over the last three years, Mike Pulli and the wider Pace team have successfully executed against our strategic plan to develop Pace into a more distinctive, profitable and cash generative company, creating significant value for shareholders”.
“While we believe that Pace is strongly positioned to continue to execute its strategy in the medium and long-term, we believe that the combination of the complementary ARRIS and Pace businesses will create a platform for future growth above and beyond our standalone potential. We believe this is a great fit for both companies, our employees, customers and trading partners,” added Allan Leighton, chairman of Pace.
In an interim management statement for the period January 1 – April 22, 2015,Leighton added: “I am pleased to report that Pace has made a good start to the new financial year. In line with our expectations, revenue in the period was higher than the same period in 2014 and forecast demand across all markets and product segments Pace operates in is building as the year progresses. As previously communicated, revenue will be stronger in H2 2015 than H1 2015, similar to 2014.
“Gross margins in the period were ahead of Q1 2014 due to the positive impact of improved revenue mix and on-going procurement benefits.
“The improved revenue, higher gross margins and lower costs contributed to increased profitability in the period compared to Q1 2014.
“Gross margins in the period were ahead of Q1 2014 due to the positive impact of improved revenue mix and on-going procurement benefits.
“We continue to focus on the execution of our Strategic Plan and have made further headway in the period.”
Founded by Yorkshire businessman Barry Rubery and business partner David Hood in 1982, Pace was the first producer of commercial modems. In the early 1990s the company branched out into analogue set-top boxes for BSkyB and other European platforms.
In 2007, Pace acquired the Philips set-top business, later adding the Latens conditional access business, all the time struggling to break the Scientific-Atlanta/Motorola stranglehold on the US market. Indeed, Scientific-Atlanta (now a part of Cisco) came close to buying Pace in the mid 1990s.
In recent times under Neil Gaydon and later Mike Pulli, Pace was able to break-through into the US, ironically losing some European share along the way.
