U.K.-based set-top box maker Pace is buying U.S. counterpart 2Wire in a $475 million cash deal that will give Pace better access to the Tier 1 U.S. telco market--especially AT&T's U-verse deployment--expanding upon its already solid position with cable and satellite operators in North America.
The proposed deal likely will be completed during the fourth quarter, following approval of Pace and 2Wire shareholders, as well as regulatory approvals.
Acquiring 2Wire, which currently is owned by a consortium including Alcatel-Lucent, AT&T, Telmex, Oak Investment Partners, Meritech Capital Partners, and Technology Crossover Ventures, would make Pace the number one provider of telco residential gateway devices in the U.S. and the number three provider globally. It already ranks as the number one global digital set-top box company, according to IMS Research.
"Pace is an excellent strategic fit for the 2Wire business and will enable us to take our products and services to the next level of their development," said Pasquale Romano, CEO of 2Wire. "The combined customer base, engineering capability and product breadth of Pace and 2Wire make this a compelling transaction for our customers, our employees and our end users globally."
2Wire products and services include residential gateways, multi-service media platforms, remote management systems, value-added services, customer support, and end-to-end integration and professional services. 2Wire customers are leading broadband providers throughout the U.S., Canada, Latin America, Europe, Australia, and Asia, including AT&T, Bell Canada, Telmex, BT, SingTel, and others.
The deal gives Pace deep leverage in the telco marketplace.
"This acquisition will strengthen our Americas business, extending Pace's U.S. market coverage with entry into the Tier 1 telco market," said Neil Gaydon, Chief Executive Officer of Pace. "2Wire, with its expertise in the broadband residential gateway market, will enable us to address a full range of U.S. operator requirements."
Gaydon said the 2Wire acquisitions will help further Pace's home entertainment convergence strategy development and introduce deep client relationships with important customers including AT&T.
"We admire 2Wire's technology and the position they have built as an acknowledged leader in the telco gateway market. We look forward to working together," he said. Pace has been in the marketplace for more than 25 years and counts among its clients some of the biggest pay-TV operators in the world including BSkyB, Time Warner Cable and some 100 other pay-TV operators.
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