Pace 'connecting the dots' with deal for specialist

The deal will boost Saltaire-based Pace's plans to place itself at the heart of convergence in the digital home.

Convergence allows consumers to connect technology such as high definition TV (HDTV), digital video recorders, video on demand, digital photography, home CCTV and gaming consoles.

Belfast-based Latens Systems specialises in software for the payTV market.

Pace's head of public relations Alison Puente said the Irish company's software will help to run and manage the various devices and digital services throughout the home.

"Latens will help to connect the dots," she said. "Convergence isn't just about the different hardware gadgets that live in the home. Convergence ties them together and helps them to interact."

The consideration for the acquisition is payable in cash and will not exceed 28.75m, of which 10m is deferred and payable in 2012 subject to the achievement of certain conditions.

Latens has expertise and software assets in areas such as middleware, systems integration, head-end technologies and IP networks – technologies that will all help Pace in its convergence strategy.

Analyst Charlie Brennan at Royal Bank of Scotland said the deal looks like a "sensible bolt-on" acquisition and he reiterated his 'buy' recommendation on the stock.

Pace's shares closed down almost half a per cent last night following the announcement, a fall of 0.9p to 204p.

Last month Pace completed its 301m acquisition of US broadband firm 2Wire.

The acquisition will propel Pace to third position in the global 'home hub' or 'residential gateway' market and will also take it beyond its core market of set-top boxes.

The residential gateway market is currently worth about $3bn globally and forecast to grow to $7bn within three to four years.

The deal will widen Pace's capabilities beyond cable and satellite to include telecoms, and is part of its plan to lead convergence in the digital home.

The majority of shareholders at or voting in proxy at the meeting, held at the company's Saltaire headquarters, backed the acquisition.

Votes representing some 218 million shares approved the deal, while five million shares were voted against it.

The purchase of 2Wire will allow Pace to take another giant stride into the US market, which is the leading marketplace for next generation digital home entertainment services.

Pace is the world's biggest supplier of set-top boxes to the pay-TV market and its strategy is to "put Pace at the heart of convergence for the digital home".