Technicolor, Cisco Seal the Deal

Technicolor takes over Cisco’s CPE division
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Technicolor said it has wrapped up its $600 million cash and stock deal for Cisco Connected Devices, the unit that makes set-tops, cable modems, gateways and other consumer premises devices.

The deal brings with it another round of consolidation in the challenging set-top box market, and comes amid  Arris’s pending merger with U.K.-based Pace Plc.  Arris and Pace are currently the top two set-top makers based on market share. Once the recent M&A wave settles, Arris will top the market, followed by Technicolor. With the agreement salted away, Technicolor will shore up its position at Charter Communications, which selected Cisco as a key supplier for its new “Worldbox,” a hybrid IP/QAM device that will utilize a downloadable security platform. Cisco is also one of theknown developers of a new “XG2” device for Comcast’s X1 platform.

Cisco will still keep its hand in the CPE game. Tied into the deal, Technicolor and Cisco have also struck up a “strategic collaboration agreement” in which they will develop next-gen video and broadband technologies, with cooperation extended to their initiatives around the so-called Internet of Things. Cisco, which received $450 million in cash, also gets 21.4 million newly issued Technicolor shares that were worth $150 million when the deal was announced. As a result, Cisco holds 5.2% of Technicolor's capital share (16.7 million are subject to an 18-month “lock up,” and 4.6 million to a 12-month lock-up). Additionally, Hilton Romanski, Cisco’s chief strategy officer, has been appointed to Technicolor’s board.

For the full story go to Multichannel.com.

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