Technicolor buys Cisco's STB division

The operation is around €550 million in shares and cash. Technicolor will have 15% of the CPE market share worldwide.

Technicolor has closed an agreement with Cisco to acquire its Customer Premises Equipment (CPE) business for €550 million in a cash and stock transaction.

In this way, Cisco's set-top-boxes (STBs) division will be integrated into Technicolor's Connected Home segment, reaching an adjusted EBITDA of more than 200 million euros at the end of 2016.

Through this transaction, Cisco will receive approximately 413 million euros ($450 million) in cash and approximately 137 million euros ($150 million) in newly issued Technicolor shares.

The operation with the incorporation of Cisco's complementary products into its portfolio will make Technicolor one of the world leaders in CPE, immediately increasing its industrial and technological scale in the main geographic regions. From now on, Technicolor will have 15% of the market share worldwide, selling more than 60 million devices per year, with an installed base of 290 million set-top-boxes and 185 million gateway solutions in more than a hundred countries.

This will also mean Technicolor will double its revenues in the Connected Home segment.

Simultaneously with the acquisition, Technicolor and Cisco have signed a strategic alliance that will allow both companies to develop and offer next-generation video and broadband technologies, with a close focus on the development of the Internet of Things (IoT). The strategic agreement maintains continued commitment to all existing customers and expanded offerings. By combining their strengths and expertise in video, from content creation to home delivery, the two companies accelerate innovation and will forge a leading entity that network service providers can rely on for their next-generation connected home experiences.

Technicolor and Cisco have also signed a long-term patent cross-licensing agreement covering specific intellectual property and patents of both companies. As part of the strategic agreement and after the transaction has closed, Hilton Romanski, Senior Vice President and Chief Strategy Officer of Cisco, will join Technicolor's Board of Directors.

The transaction is expected to close by the end of the fourth quarter of 2015 or during the first quarter of 2016, subject to regulatory approvals and customary closing conditions.