Arris to buy Pace for $2.1 bn to expand STB biz and cut taxes

Arris Group announced its deal to buy British set-top box (STB) maker Pace for $2.1 billion to expand its operations outside North America and cut taxes.

As part of the cash-and-stock deal, Arris Group will set up a new company that will be incorporated in the UK to reduce corporate taxes.

Arris said the deal will reduce its non-GAAP tax rate to about 26-28 percent from 36.8 percent in 2014.

Reuters reported the STB deal comes at a time when the traditional video service industry is being shaken up by over-the-top services, which allow consumers to stream videos through a high-speed broadband connection.

Arris Chief Executive Bob Stanzione said the combination would be able to better compete in an increasingly competitive market.

Arris

“Over the past several months, there have been a number of new entrants both on the side of new services that are being offered over-the-top, as well as new devices that are used at homes in order to translate those services to video streams to serve television sets,” Stanzione said on a conference call.

Arris’ largest customers include Comcast, Time Warner Cable and AT&T, while competitors include TiVo Inc and Cisco Systems.

Arris will fund the cash portion of the deal through a combination of cash and debt. The company secured a loan from Bank of America Merrill Lynch to fund the transaction.

Current Arris shareholders will hold about 76 percent shares in the combined company, with Pace shareholders holding the rest.

editor@telecomlead.com

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