Technicolor swoops for Cisco connected devices division for €550MN

DetailsJoseph O'Halloran | 23 July 2015




As the IT and networking giant pursues its strategy of cloud-based video, Cisco is selling off its connected devices division, including set-top boxes (STBs), to Technicolor in a deal valued at €550 million.


The addition of Cisco's complementary product portfolio —subject to regulatory approvals and customary closing conditions — will make Technicolor one of the global leaders in CPE and will immediately increase its scale in all major geographies, giving it a 15% market share worldwide from around 60 million devices shipped each year. It will also mean a global presence comprising an installed base of approximately 290 million STBs and around 185 million gateways in over 100 countries.

On paper the deal will also result in Technicolor's connected home segment generating around €3 billion in pro forma revenues in 2014, doubling Technicolor's revenues in the connected homesegment, reaching adjusted EBITDA in excess of €200 million by the end of 2016 and profitability in the range of 8-9% adjusted EBITDA margin by 2017. The transaction is also hoped to translate into double-digit EPS starting in the first full year after closing, expected to be by the end of 2015 or during the first quarter of 2016.

Technicolor and Cisco will additionally enter into a strategic partnership that will allow both companies to develop and deliver next-generation online video and broadband technologies, with co-operation on Internet of Things (IoT) solutions and services. The two firms have also signed a long-term patent cross-licensing agreement that covers specific intellectual property and patents from both companies.

Commenting on his firm's acquisition Technicolor CEO Frederic Rose said: "We know that video expertise is essential to the future of creating outstanding network and home infrastructure products and services. Through this acquisition and strategic agreement, Technicolor can immediately bring its unrivalled experience and innovation in video creation, delivery, and display to more customers in more geographies, while strengthening our position as a technology leader."

"The strategic relevance of video to every consumer, business, city and country around the world is only growing, and the market is moving rapidly," added Cisco chairman and CEO John Chambers. "This is the right time and we have the right company in Technicolor to drive the future of the CPE business to deliver what our customers and partners need, today and into the future. At Cisco, we are prioritising our investments to deliver on our strategy of video in the cloud, and will partner with Technicolor to position the CPE business and employees for future success."