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Arris has announced it intends to acquire competitor Pace in a deal worth $2.1 billion in stock and cash.
April 22, 2015
In a surprise announcement after market close today, Arris said that it intends to acquire Pace in a stock and cash deal worth $2.1 billion.
The acquisition comes only two years after Arris Group Inc. (Nasdaq: ARRS) swallowed the Motorola Home business, and it is expected to increase Arris' revenues from $5.3 billion to $8 billion per year. The new company, which will incorporate under the name New ARRIS, will employ roughly 8,500 people globally. It is expected to be listed on the NASDAQ stock exchange under the ticker sign ARRS.
Although the announcement of the Pace plc deal was unexpected, Arris CEO Bob Stanzione has stated on several occasions that the company would consider ways to expand into the satellite market. Arris currently does a small amount of business in the satellite industry, but Pace brings in a much stronger portfolio of satellite set-top products. (See Arris Likes Its Charter Chances Too.)
Want to know more about pay-TV subscriber trends? Check out our dedicated video services content channel here on Light Reading.
On the cable side of the set-top business, Arris and Pace are active competitors today. Among overlapping customers, Comcast Corp. (Nasdaq: CMCSA, CMCSK) uses both Arris and Pace boxes for its X1 video service. Assuming the companies merge, their set-top product lines would ultimately be combined. However, Stanzione expressed no concern over the prospect.
"We'll be able to combine those product lines just like when Arris and Motorola got together two years ago," said Stanzione. "There was some overlap, and we quickly combined those product lines, combined the product roadmaps, and we were able to actually accelerate the development of new, innovative products."
In other recent acquisition news, Arris and Charter Communications Inc. announced just last week that they are forming a joint venture with the intent to acquire set-top virtualization company ActiveVideo Networks. Stanzione also said that he would "not slam the door shut on our doing other deals" in the near term. (See Arris, Charter Nab ActiveVideo for $135M.)
Arris and Pace will need regulatory approval to complete their transaction, but the companies said they expect to close the deal in late 2015. If the deal doesn't close, there is a breakup fee of $20 million "payable under certain conditions."
— Mari Silbey, special to Light Reading
Senior Editor, Cable/Video
Mari Silbey is a senior editor covering broadband infrastructure, video delivery, smart cities and all things cable. Previously, she worked independently for nearly a decade, contributing to trade publications, authoring custom research reports and consulting for a variety of corporate and association clients. Among her storied (and sometimes dubious) achievements, Mari launched the corporate blog for Motorola's Home division way back in 2007, ran a content development program for Limelight Networks and did her best to entertain the video nerd masses as a long-time columnist for the media blog Zatz Not Funny. She is based in Washington, D.C.
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