Shareholders back Pace’s Aurora merger

British set-top box maker Pace is set to complete its US$310m acquisition of US fibre solutions firm Aurora Networks after getting the nod from shareholders.
Almost all investors voting at its AGM today, representing 72.29% of total issued share…

British set-top box maker Pace is set to complete its US$310m acquisition of US fibre solutions firm Aurora Networks after getting the nod from shareholders.

Almost all investors voting at its AGM today, representing 72.29% of total issued share capital, were in favour of the deal to further branch out from pay-TV terminals. The transaction is due to be completed later today.

Originally announced last October, Pace said it will fund the move with a five-year loan provided by HSBC and RBS as joint underwriters, bookrunners and mandated lead arrangers. JP Morgan, which is also the company’s financial adviser, is a lead arranger.

Based on results for the year to the end of March 2013, the transaction represents an EV/EBITDA multiple of 10.5x before synergies and is part of a plan to grow a broader platform across hardware, software and services.

Aurora makes optical systems used by fibre providers and, as the traditional set top box business model faces increasing competition from increasingly sophisticated software and devices able to integrate TV with the internet, Pace believes the acquisition will build deeper and more embedded relationships with customers.

On top of the US$310m cash-free and debt-free headline consideration, of which 15% is reserved for Aurora’s existing management and employees as a retention tool, Pace will pay a further US$13m that is connected to tax benefits to be recovered over three years.