PACE ACQUIRE XCOM FOR £18 MILLION

PACE Micro Technology have acquired leading digital television technology company, Xcom Multimedia Communications SA, (Xcom), for an initial consideration of £18.1 million, to be satisfied by the issue of 2,635,418 Pace ordinary shares and £0.8 million in cash.
Further consideration to a maximum of £22 million may be payable in Pace shares (or cash at Pace’s option) dependent on the gross margin performance of Xcom in the period to 31 December 2002. The acquisition is expected to be earnings’ enhancing in the next financial year.
Xcom, based in Grenoble France, sells digital set-top boxes (gateways), with an international client base in Europe, the Middle East and Asia. They are also the leading branded suppliers in the French retail distribution market for digital gateways. For calendar year 2000, Xcom achieved a turnover of FFr163 million. The Xcom team numbers over 60 people, who have built a reputation for innovative, cost-effective broadcasting solutions and speed to market, since developing their first products in 1995.
The Digital TV Adapter (DTVA) developed by Xcom, delivers free-to-air or encrypted digital television services into non-pay TV homes and to secondary televisions in multi-television households. The company has expertise in several conditional access technologies, two of which – Conax and Viaccess – further extend Pace’s broad portfolio of relationships for this vital element of a pay TV digital gateway
Commenting on the acquisition, Malcolm Miller, Chief Executive of Pace Micro Technology, said: “Xcom fits well with Pace’s strategy of strengthening their position as the world’s largest dedicated developer of digital television gateways. They have developed a leading product for analogue switch off, and will further expand Pace’s overseas revenues. The new products and customers, benefiting from Pace’s technology portfolio, will provide further immediate revenue and profit opportunities for the Group.” (CD)