Cisco Systems announced its intent to acquire NDS Group for approximately $5 billion. NDS provides video software and content security solutions designed to enable service providers and media companies to deliver and monetize video entertainment.
The acquisition is expected to close during the second half of the year, subject to customary closing conditions, including regulatory review in the United States and elsewhere.
Cisco says the acquisition of NDS will complement and accelerate the delivery of Videoscape, which is a key part of the company’s overall video strategy to enable service providers and media companies to deliver next-generation entertainment.
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NDS makes software for TV set-top boxes and solutions, such as the end-user viewing client and content security solutions. It has a long relationship with News Corp., and also works with British Sky Broadcasting, Canal Plus and DirecTV, which use its solutions to prevent their channels from being hacked.
Cisco is also aiming to broaden its opportunities in emerging markets, such as China and India, where NDS has an established customer footprint.
In its presentation, Cisco CEO and Chairman John Chambers noted the NDS acquisition will be accretive to earnings per share in the first full year on a non-general accepted accounting procedure basis; shows investment in software and services revenue streams and competencies; and deepens Cisco’s commitment to video as a foundational priority.
Incorporating NDS’ solutions, Cisco will look to have a market leadership portfolio for cloud, network, client; proven solutions for cable, IPTV and satellite; become stronger in every geographic region; and provide compelling experiences on all devices.
Under the terms of the agreement, Cisco will pay approximately $5 billion, including the assumption of debt and retention-based incentives, to acquire all of the business and operations of NDS. The acquisition has been approved by the boards of directors of both companies.
In 2011, NDS earned $252 million in net income on close to a $1 billion in revenue.
Prior to the close, Cisco and NDS will continue to operate as separate companies. Upon completion of the transaction, NDS’s global operations, including sites in the United Kingdom, Israel, France, India and China, and its approximately 5,000 employees will join the Cisco service provider video technology group, led by SVP and GM Jesper Andersen.
