euro news_news 21/05/2015 18:34 Page 4
ARRIS buys
Pace for $2.1bn
n a further consolidation of the
broadband and pay-TV technology
sector, ARRIS is buying Pace for
$2.1 billion (€1.96 billion) in cash and
stock. The transaction will result in the
formation of New ARRIS, which will be
incorporated in the UK,with its
operational and worldwide
headquarters in Suwanee, Georgia, USA.
The transaction has been approved by the
respective Boards of Directors of ARRIS and
Pace and is expected to close in late 2015 after
customary closing conditions, including ARRIS
and Pace shareholder approval.
ARRIS chairman and CEO, Bob Stanzione
will be New ARRIS chairman and CEO. “This
transaction is another example of ARRIS’s
ongoing strategy of investing in the right
opportunities to position our company for
growth. Adding Pace’s talent, products and
diverse customer base will provide ARRIS with
a large scale entry into the satellite segment,
broaden our portfolio and expand our global
presence. We expect this merger will enable
ARRIS to increase its speed of innovation. We
believe this is a tremendous opportunity for
ARRIS and our customers, employees,
shareholders and partners around the world as
we collaborate to invent the future,” said
Stanzione. “We look forward to working with
the talented and accomplished team at Pace.”
“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.
Over the last three years, Mike Pulli and the
I
Altice acquires
Suddenlink
Multinational cable and
telecommunications
company Altice is to
acquire 70% of the share
capital in Suddenlink, the
seventh largest US cable
operator, from existing
shareholders BC Partners,
CPP Investment Board and
Suddenlink management.
12 EUROMEDIA
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.”
“The Pace Directors believe that ARRIS’s
offer recognises this value and also gives our
shareholders the opportunity to share in the
future success of the combined group. 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
“Pace plc is a great
company with a strong
track record of
pioneering innovation
and excellent customer
service. “
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,” said Allan
Leighton, chairman of Pace.
As Daniel Simmons, director of connected
home analysis at IHS Technology points out,
ARRIS’s acquisition of Pace will create the
world’s largest supplier of set-top box (STB),
broadband gateway and cable TV technology.
Combined 2014 revenues of $7.9 billion make
it twice the size of its nearest competitor,
BC Partners and CPP
Investment Board will
retain a 30% stake in
Suddenlink. The deal
values Suddenlink at $9.1
billion.
Dexter Goei, CEO of
Altice, said the company was
“very excited” about the
acquisition of Suddenlink
and was highly committed to
continue to improve network
investment, customer offers
Cisco’s Service Provider Video business unit.
ARRIS’s business is largely US-cable-TVcentric and its recent growth is a direct result of
its Motorola Home acquisition.
“Future growth for ARRIS critically
depends on it expanding outside of the US,
where its current growth opportunity is limited
by a stagnating pay TV market. Pace will bring
ARRIS an expansion of width and scale that
would be difficult for it to achieve organically.
Pace has a large portfolio of high-value pay TV
operator clients in EMEA and APAC, a large
scale satellite STB business, a strong play in
DSL gateways, and a long-standing
relationship with DirecTV; all things ARRIS
currently lacks,” he advises.
“However, Pace’s STB and
broadband gateway
business slowed in
2014, and is
indicative of a global
slowdown in this
sector and reflected in
ARRIS’s $ 2.1 billion
offer, which effectively
values Pace at 80 per cent of
its 2014 revenue. It’s likely that we’ll see
further consolidation in this sector in the near
future, with the value of the STB industry
expected to fall from $22.7 billion in 2014 to
$18.8 billion by 2019,” he suggests.
“ARRIS’s largest opportunity will come
from supplying the combined customer base of
pay TV operators with products and solutions
that help them succeed against competition
from Over the Top (OTT) video and television
providers such as Apple and Netflix. It will also
help them succeed against the competition
from content creators looking to use OTT as a
means of bypassing pay TV to go direct to
consumer. These solutions will only partially
include STBs and will place greater emphasis
on network and cloud technologies as well as
software designed to optimise the user
experience. The need to include these elements
in a modern TV platform will drive ARRIS and
its competitors to make further acquisitions.”
and service innovation in the
attractive US market. “Our
investment in Suddenlink,
our first in the cable sector
in the US, opens an attractive
industrial and strategic
avenue for Altice in the US,
one of the largest and
fastest growing
communications markets in
the world. We are looking
forward to our partnership
with BC Partners and CPP
Investment Board and believe
Suddenlink is a best-in-class
business that should be able
to deliver profitability and
cash flow levels in line with
the best European cable
businesses.”
The transaction is
expected to close in the
fourth ]X\