UK-listed telecoms and television equipment maker Pace has agreed to acquire 2Wire, a US-based provider of broadband services with more than a decade of venture backing, for $475m.
The deal, whose price includes $55m of cash on 2Wire’s books, delivers broadly the same amount back to the three strategic investors as they had paid in a December 2005 secondaries deal from the original venture capital (VC) investors.
Telecoms equipment maker Alcatel, before its merger with Lucent, bought a 25% stake in 2Wire at the end of 2005, which news provider VentureWire said after an interview at the time had cost $120m.
In addition to Alcatel’s investment, US phone operator AT&T bought a 9% stake, VentureWire said, and Telmex an estimated 17% from 2Wire’s existing shareholders.
From 2Wire’s press releases, the company raised $177.5m between July 1998 and December 2002 from oil major Shell and computer maker Dell’s corporate venturing divisions and VCs Oak Investment Partners, Venrock Associates, Technology Crossover Ventures, Weber Capital, Pilgrim Baxter, DCM (Doll Capital Management), Invesco Private Capital Group, Granite Global Ventures, Meritech Capital and Accel Partners.
VentureWire said 2Wire had raised $192m from its VCs.
Following the completion of the acquisition, Pace said it would be the biggest provider of telecom residential gateway devices in the US and the number three globally as well as the largest global digital set-top box company.
Neil Gaydon, chief executive of Pace, said: "This acquisition will strengthen our Americas business, extending Pace’s US market coverage with entry into the tier one telco market. We have built a strong position in the US with cable and satellite operators and 2Wire, with its expertise in the broadband residential gateway market, will enable us to address a full range of US operator requirements. 2Wire’s software and gateway expertise will further drive development of our home entertainment convergence strategy. The transaction introduces deep client relationships with important customers including AT&T and further develops our platform to deliver ongoing sustainable growth."