Technicolor has completed the acquisition of Cisco Connected Devices, the company’s customer premises equipment (CPE) business for $600 million. Hilton Romanski, the chief strategy officer of Cisco, has been appointed to Technicolor’s board of directors as part of the deal, first announced in July this year.
The deal allows Cisco to focus on the transition of video to cloud and software-based services, which is its primary focus going forward. Cisco’s service provider video business will continue to focus on software, security, cloud and services while also working hardware partners, including Technicolor.
Technicolor and Cisco will develop and deliver next generation video and broadband technologies, and work in partnership on internet of things (IoT) solutions and services. Both companies have also signed a long-term patent cross-licensing agreement that covers specific intellectual property and patents from both companies.
Cisco has received $450 million in cash financed by the rights offering that Technicolor closed on 17 November and new debt raised in October. Cisco has also received 21,418,140 newly issued Technicolor shares or an amount equivalent to $150 million. As a result, Cisco holds 5.2 per cent of Technicolor’s share capital, effective immediately.
The addition of Cisco’s product portfolio as a result of the deal will, Technicolor hopes, boost its Connected Home division and result in; an adjusted EBITDA in excess of €200 million by year end 2016; best-in-class profitability (ie eight to nine per cent adjusted EBITDA margin) by 2017; and synergies generation in excess of €100 million per annum with a run-rate level to be reached by 2018.
The integration of the Cisco Connected Devices assets is starting immediately and the collaboration agreement between Technicolor and Cisco is now moving into the implementation stage.
The transaction has closed in all operating geographies, with the exception of Brazil where closing remains subject to local approvals, and Colombia where Cisco Connected Devices’ operations have been carved-out pending a decision by the antitrust authority.