Pace buys Philips' STB business

Pace Micro is to buy the set top box and connectivity solutions business of Philips in a transaction valued at £68m.

Under the terms of the all-share deal, Philips will take a 22.5% stake in Pace, which will be able to use the Philips brand in retail distribution for the next three years.

Pace chief executive Neil Gaydon said: "Based on 2006 performance, this deal will create a company with pro forma revenues of over $1.0bn, producing approximately 8.5m set top boxes a year. Pace and the Philips [set top box and connectivity solutions business] combined technologies, expertise and customer reach will create a leading centre of excellence in the set-top box industry. There is a strong strategic fit from customer, product, geographic, culture and scale perspectives. We have minimal customer overlap and the combined group will have a significantly enhanced technological position.

"The acquisition brings capabilities in IPTV, terrestrial, retail and connectivity products, which will extend the strong position we have built through relationships with leading pay TV operators. We also believe there is potential for improved efficiencies by utilising the operating model and business structure we have built at Pace over the last two years."