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.
“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.
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