Technicolor announced that it has closed its $600 million acquisition of Cisco's CPE unit, Cisco Connected Devices.
The deal combines the Nos. 3 and 4 set-top makers, creating what will be the second biggest CPE company next to the newly combined Arris and Pace, which is still pending regulatory approval. Technicolor's combined unit will control around 15 percent of the market for pay-TV set-top boxes, routers and switches, compared to about 25 percent for Arris-Pace.
Cisco won't be totally removed from the development and manufacturing of set-tops, gateways and routers. Technicolor also announced that it's entering into a strategic collaboration agreement with Cisco that will allow both companies to develop and deliver new video and broadband technologies, as well as Internet of Things solutions and services.
"Cisco will remain the clear market leader in both video infrastructure software and video network hardware," wrote Synergy Research Group's chief analyst John Dinsdale, in a report analyzing the global pay-TV set-top market and published in July, shortly after the deal was announced.
Cisco has received $450 million in cash financed by a successful rights offering that Technicolor closed on Nov. 17 and new debt raised in October. Cisco has also received just over 21.4 million newly issued Technicolor shares valued at $150 million.
Cisco now owns 5.2 percent of the French media technology conglomerate's shares. And Hilton Romanski, chief strategy officer for Cisco, will now sit on Technicolor's board of directors.
The deal has not closed regulatory approval in all regions, with Brazil and Colombia still outstanding.
Technicolor recently appointed former Alcatel-Lucent executive Luis Martinez Amago as president of its North American Connected Home unit.
With cloud-based architectures increasingly driving the video infrastructure market, Cisco is looking to focus on the server and software side of the business, Dinsdale said. The Silicon Valley giant doesn't see enough profit in the mature CPE industry.
For its last full quarter of operation under Cisco, the company's Connected Devices division reported a 14 percent slowdown in its revenues to $411 million.
- read this Technicolor press release
Cisco's issues sluggish forecast, shows declines in CPE sales to $411M
Cisco bails on fast-declining set-top market, sells unit to Technicolor for $602M
Why the once-great pay-TV set-top box market is now in retreat