Pace Micro Technology has agreed to acquire the set-top box business of Royal Philips Electronics.
Pace is paying £68m for the business which supplies digital TV products including satellite, cable, terrestrial and IPTV set-top box products.
The business employs approximately 335 staff predominantly based in France.
As part of this transaction, Pace will be entitled to utilise the Philips brand in retail distribution for an agreed range of products for the next three years.
"Based on 2006 performance, this deal will create a company with pro forma revenues of over $1.0bn, producing approximately 8.5 million set top boxes a year," said Neil Gaydon, CEO of Pace.
According to Gaydon: "The Acquisition brings capabilities in IPTV, terrestrial, retail and connectivity products, which will extend the strong position we have built through relationships with leading payTV operators. We also believe there is potential for improved efficiencies by utilising the operating model and business structure we have built at Pace over the last two years."
The proposed transaction values the business at up to €95.0 million (£68.0m). The consideration for the acquisition will be satisfied by the issue of 68.0 million new Pace shares to Philips at completion and up to a further 1.9 million new Pace shares on or shortly after completion together with a further €5m (£3.6m) in cash over 3 years from completion.
At completion, Philips will hold approximately 22.5% per cent. of the enlarged share capital of Pace, of which 17% is subject to a one year lock-in from the date of completion.
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