Cisco to Acquire NDS for $5 Billion to Add Digital TV Software

 

Cisco Systems Inc. (CSCO), the largest maker of equipment for computer networks, agreed to buy NDS Group Ltd. (NNDS) in a deal valued at about $5 billion to add software used in next-generation video services.

The purchase price includes debt and retention-based incentives, San Jose (GSJ), California-based Cisco said in a statement today. The boards of both companies have approved the transaction, which is subject to regulatory review and will be completed in the second half of 2012, it said.

NDS, which makes software for paid-television channels used by British Sky Broadcasting Corp., Canal Plus andDirecTV (DTV), is co-owned by Rupert Murdoch’s News Corp. and London private- equity firm Permira Advisers LLP.

“Our strategy has always been driven by customer need and on capturing market transitions,” Cisco Chief Executive Officer John Chambers said in the statement. “Our acquisition of NDS fits squarely into this strategy, enabling content and service providers to deliver new video solutions that leverage the cloud and drive new monetization opportunities and service differentiation.”

News Corp. (NWSA) and Permira took NDS private in 2008 in a deal valued at about $1 billion that gave New York-based News Corp. a 49 percent stake and Permira the remaining 51 percent. News Corp. had previously held 72 percent.

Price Competition

Cisco CEO Chambers began a turnaround plan at the company last year, when he cut jobs, eliminated businesses and refocused on more profitable products. The company got more competitive on price last quarter and offered new products. NDS’s products are used to send interactive content to TV set-top boxes, digital video recorders and mobile phones.

Last month, Cisco reported fiscal second-quarter earnings and sales that beat estimates, defying concerns that delays in network upgrades by phone and cable companies would drag down revenue.

Cisco has been trying to reignite growth after years of sluggish networking spending and market-share losses to rivals.

By Serena Saitto and Amy Thomson - Mar 15, 2012 8:18 AM ET 

To contact the reporters on this story: Serena Saitto in New York at ssaitto@bloomberg.net; Amy Thomson in London at athomson6@bloomberg.net

To contact the editors responsible for this story: Jennifer Sondag at jsondag@bloomberg.net; Kenneth Wong at kwong11@bloomberg.net