ARRIS agrees $2.1BN acquisition of Pace
DetailsJoseph O'Halloran | 23 April 2015
In a move showing clearly the contrasting corporate fortunes of the two parties over the last few years, ARRIS has revealed that it is to acquire Pace in a deal valued at $2.1 billion.
Despite having an excellent record for innovation in broadcast technology and services, Pace has been on the financial back foot since 2011 when it los three of its most senior executives, including chief executive Neil Gaydon, following massive inventory problems stemming from flooding at a key supplier in Thailand.
pacejul2014Yet four years later under CEO Mike Pulli, the company published in January 2015 an advisory predicting profitability for the 2014 financial year to be ahead of guidance.
Indeed the company said that record Q4 revenue resulted in a strong finish to the year, with full year revenue expected to be $2.610 billion, up 6%, with an operating margin of not less than 9.2%. Pace forecast adjusted EBITA to be at least $240 million, 24% ahead of 2013's figure.
By stark contrast, since it acquired Motorola Home in April 2013, ARRIS has steamed on with new products and strategic acquisitions, the latest of which is expected to generate significant earnings, accelerating growth strategy and around $8 billion in pro forma revenues from a combined entity that will have around 8,500 globally based employees. The move expands the ARRIS product portfolio across equipment, software, and services, especially into the satellite segment which Pace has been strong in.
The transaction will result in the formation of a company to be called New ARRIS, which will be incorporated in the UK and which will be headed by the current ARRIS board. "This transaction is another example of ARRIS's on-going 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," said ARRIS Chairman and CEO, Bob Stanzione, commenting on the deal. "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 Bob Stanzione. "We look forward to working with the talented and accomplished team at Pace."
"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," added Pace Chairman Allan Leighton. "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 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," added Pace Chairman Allan Leighton.