Pace to acquire Aurora Networks for US$310 million

UK set-top provider Pace is to acquire optical networking for access networks leader Aurora Networks for US$310 million (€226 million).

According to Pace, the acquisition positions it to support operators’ demand for increasing bandwidth as well as combining a highly profitable and growing business serving over 200 customers in 50 countries and further widening Pace’s business out from customer premises equipment.

“Since the announcement of the Pace Strategic Plan on 17 November 2011, we have consistently delivered on it, achieving almost all of the milestones and targets laid out at that time and there remains significant opportunity for development of the core business. The acquisition of Aurora represents an important evolution in this process and enhances our strategy to grow a broader platform across hardware, software and services. Acquiring Aurora will allow Pace to expand beyond our core business and build deeper and more embedded relationships with our customers, which the Company believes will strengthen Pace’s position as a market leading solutions provider for the pay TV and broadband industries,” said Pace chairman Allan Leighton.

“Following a strong first half in 2013, good progress has been made in the period with continued momentum across the business. I am pleased to be able to announce the acquisition of Aurora. Aurora is a leading player in the pivotal area of Optical Transport and Access Network solutions, with a complementary overlap to Pace’s blue-chip customer base and a strong and seasoned team of talented and innovative cable industry professionals,” said Pace CEO Mike Pulli.

Pace will pay US$310 million plus a further US$13 million payable on closing in connection with tax benefits. The acquisition will be financed by a new US$310 million five-year amortising term loan, and Pace is using the deal as an opportunity to refinance its existing debt with a new US$150 million five-year revolving credit facility.

The company said the acquisition would be accretive to earnings next year and would accelerate Pace’s profitability drive towards a 9% return on sales rate by 2015. The value of the acquisition represents a historic EBITDA multiple of 10.5, or 8.2 after expected synergies.

Separately, Pace is to to provide a full whole home solution to Altibox, the Norwegian triple-play service provider.

Pace’s Whole Home solution will enable Altibox to deliver broadband and TV throughout the home.

The solution includes Pace’s next generation Media Server platform and Pace’s client platforms. The Media Server acts as a hub for both premium and non-premium content into and around the home, while the clients extend Altibox’s service onto multiple TV screens within the subscriber’s home.