Cisco To Pay $5 Billion for NDS, Video Services Provider

Vendor says acquisition for U.K.-based video software specialist will quicken delivery of its Videoscape streaming platform, open new markets.

Cisco Systems Inc. said today that it has offered $5 billion in cash for NDS Group Ltd., a privately-held, Staines, U.K.-based provider of video software and services, in a deal that expands the vendor’s reach with service providers into emerging markets and broadens its Videoscape video delivery platform.

The transaction, which is expected to close in the second half of 2012 and is subject to regulatory review in the U.S. and elsewhere, includes Cisco assuming a reported $1 billion in debt and retention-based incentives. The boards of directors of both companies have approved the deal, officials said.

The acquisition is Cisco’s largest since December, 2009 when it bought Tandberg, another video company, for $3.4 billion.

NDS, which posted $960 in sales and about $250 million in income for the 12 months ended September 30, 2011, employs some 5,000 people in 23 offices in the U.S., Canada, Europe and Asia Pacific. The company specializes in software for the pay television industry, specifically solutions used by cable television and satellite operators to secure signals through devices such as set-top boxes.

NDS lists heavyweights such as British Sky Broadcasting, China Central Television and DirecTV as key customers. Cisco said that a notable percentage of NDS’ revenue from sales of software, services and content protection is recurring, housed under contracts with an average duration of five years.

Under terms of the acquisition, NDS will be folded into Cisco’s Service Provider Video Technology Group (SPVTG), headed by Jesper Andersen, Cisco, senior vice president and general manager.

Dr. Abe Peled, NDS executive chairman, will serve as senior vice president and chief strategist of Cisco’s Video and Collaboration Group, which also includes SPVTG. Peled will report to Marthin De Beer, Cisco senior vice president, Video and Collaboration Group.

Video is a key component of Cisco’s business focus, which the vendor has pared down recently also to include architectures, collaboration, data center virtualization and cloud computing, and routing, switching and services.

John Chambers, Cisco chairman and chief executive, in alluding to the vendor’s emphasis on video, said that the acquisition “fits squarely” with its strategy to capture market transitions.

Chambers said that the NDS deal will enable “content and service providers to deliver new video solutions that leverage the cloud and drive new monetization opportunities and service differentiation."

Officials suggested that NDS’ technology, specifically its end-user viewing client, content security and systems integration expertise will advance Cisco’s Videoscape platform.

"Cisco and NDS are helping drive the transition that will enable service providers and media companies to offer new revenue-generating video experiences,” Peled said.

“NDS's open software video platform and services are highly complementary to Cisco technology, and together we are uniquely positioned to enable service providers to deliver fresh and exciting multi-screen video services to their customers,” he said.  

In December, 2011, NDS filed with the U.S. Securities and Exchange Commission (SEC) to raise up to $100 million in an initial public offering.

TAGS: video,Cisco,acquisition,service provider,Videoscape,NDS Group

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