Pace Plc (LSE: PIC.L) has confirmed it was part of a group bidding on Google's (Nasdaq: GOOG) Motorola Home Business unit.
The Financial Times reported that the set-top box maker has "stepped forward as the first public bidder… setting the stage for a deal that could far exceed the British company's own stock market value."
Pace, the story said, called its offer an "indicative, non-binding proposal."
There is some history involved in the bid. Motorola's Home Business Unit is the remnant of General Instrument, once part of the cable industry's vendor duopoly along with Scientific-Atlanta (now a Cisco [Nasdaq: CSCO] unit). While Google has made it clear that it wants nothing to do with selling equipment, that business has not gone away as multichannel video programming distributors (MVPDs) ranging from leading MSOs to telcos to satellite providers all continue to buy and upgrade technology infrastructure and set-top boxes.
Adding even more to the intrigue, Pace was Americanized when Mike Pulli, previously the head of American operations, took over from deposed CEO Neil Gaydon in 2011. Pulli cut his teeth with General Instrument and has maintained contacts with the company even as it evolved into Motorola and now Google. He has also steadfastly worked to keep Pace in the equation as a viable third equipment vendor in the U.S. markets.
While some, including Exane BNP Paribas analyst Alexandre Faure, questioned the need for the deal as anything more than a defensive move against Cisco and Technicolor, the bid received support from some important parties, including the company's largest shareholder.
"We've only seen the proposal in its broadest outline, but these people have earned the benefit of the doubt. They've got every chance to make this a success," Tom Dobell, manager of Pace's largest shareholder, the M&G Recovery Fund, told the newspaper.
The story predicted auction prices for the unit could reach $2.5 billion, which "would dwarf Pace's own stock market value" and make it a "reverse takeover under U.K. law."
- the Financial Times had this story (sub. req.)
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