Pace secures loans to snap up 2Wire

 
Steve Dinneen
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PACE, the world’s largest set-top box maker, has agreed loans of $450m (£291.1m) to fund its acquisition of US broadband technology firm 2Wire.

A $300m term loan and $150m of revolving credit were underwritten by HSBC and Royal Bank of Scotland. An existing £35m credit line with RBS was cancelled.

The acquisition, which Pace hopes will broaden its customer base beyond cable and satellite into internet TV, is still dependent on shareholder approval. The firm, which became the top set-top box manufacturer in May, said 2Wire had an established relationship with US telecoms providers including AT&T, and the deal would catapult it to number three in the global telecommunications home-hub market.

Pace chief executive Neil Gaydon said of the deal last month: “We have built a strong position in the US with cable and satellite operators and 2Wire, with its expertise in the broadband residential gateway market, will enable us to address a full range of US operator requirements.”

2Wire is owned by a consortium including Alcatel-Lucent, AT&T, Telmex and Oak Investment Partners.

Yorkshire-based Pace, which makes set-top boxes for BSkyB Canal+ and Comcast also reported a 46 per cent rise in first-half pre-tax profit.

The company posted pre-tax profit of £45.4m on 21 per cent higher revenue of £635.2m in the six months to the end of June. It said given its strong market position and ongoing demand for digital television, it should deliver mid-single digit revenue growth over the medium term.

The market for set-top boxes has rocketed in recent years, with Sky in particular shifting huge quantities of the devices.

It looks set to continue to expand with the long-anticipated Project Canvas internet TV service looking likely to launch next year. The service, supported by media and telecoms giants including BT and the BBC will allow users to access the internet via their TV through a set-top box.