Pace to acquire Aurora for £191m

Saltaire-based Pace said the acquisition would significantly add to 2014 earnings and was expected to generate annual cost synergies of $8m by the end of next year.

The company will also pay an additional $13m on closing of the deal related to tax benefits.

The deal will be funded through a new $310m five-year term loan, Pace said.

Aurora manufactures optical systems used by cable companies to build fibre-optic networks. The company, whose products include equipment such as amplifiers, transmitters, receivers and switches, reported revenue of $217m in the year ended March 31.

Jefferies analyst Lee Simpson said that the existing cash conversion at Pace, together with synergies from this deal should pay off within two years.

“Pace targeted this opportunity without impairing the existing capital structure - no rights issue was used, so no investors were diluted. The simple addition of profits sees the new group with around $240m EBITA on (revenue of) about $2.6bn pre-synergies,” Mr Simpson wrote in a note to clients.

Aurora will operate as a strategic business unit of Pace and will continue to be run by its existing senior management team, the TV decoder maker said in a statement.

Pace added that 15 per cent of the deal value would be reserved for Aurora’s existing management and employees as a retention tool.

JP Morgan Cazenove acted as Pace’s financial adviser on the deal, which is expected to close by the end of the year.