More Broadcast Vendor M&A: Cisco Announces Intent to Buy NDS

Posted by Joe Zaller
Mar 15 2012

Cisco Systems announced its intent to acquire pay TV software and conditional access provider NDS in a $5 billion deal.

Cisco said that the deal will complement and accelerate the delivery of its Videoscape video platform, and broaden Cisco’s opportunities in the service provider market, expanding its reach into emerging markets, such as China and India, where NDS has an established customer footprint.

Under the terms of the agreement, Cisco will pay approximately $5 billion, including the assumption of debt and retention-based incentives, to acquire all of the business and operations of NDS. The acquisition has been approved by the boards of directors of both companies.

For now Cisco and NDS will continue to operate as separate companies.

When the deal is completed in the second half of 2012,  NDS’s global operations, including sites in the United Kingdom, Israel, France, India and China, and its approximately 5,000 employees will join the Cisco Service Provider Video Technology Group (SPVTG), led by Senior Vice President and General Manager Jesper Andersen. Dr. Abe Peled, NDS Executive Chairman, will be named Senior Vice President and Chief Strategist for Cisco’s Video & Collaboration Group, of which SPVTG is a part. Peled will report directly to Marthin De Beer, Senior Vice President, Cisco Video and Collaboration Group.

NDS was previously listed on the Nasdaq until it was taken private in 2009 by Permira Advisers LLP, a private equity firm. Permira owns 51% of the company, with News Corporation owning the remaining 49%.

In December of 2011, NDS file for an IPO to raise $100m. In its S-1 filing with the SEC, NDS said it had revenue of $957m in the year ended June 30 2011.  For the quarter ending September 30, 2011 NDS posted a profit of $4.5m on revenue of $214m.

Cisco has made multiple acquisitions as part of its strategy to build out its Videoscape platform.  Last year Cisco bought ingest and transcoding specialist Inlet Technologies for $95m.

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Related Content:

Press Release: Cisco Announces Intent to Buy NDS

NDS Group Files for $100m IPO

NDS S-1 Filing with the SEC

More Broadcast Vendor M&A: Cisco to Buy Inlet Technologies for $95m

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One Response

  1. Brad Reese says:

    Hi Joe,

    NDS appears to be another BS acquisition by Cisco, I mean, Cisco is foolishly betting $5 billion against the success of OTT (Over-the-top content).

    Cisco’s paying $5 billion in cash to acquire Bermuda tax haven incorporated NDS Group, which 3-years earlier had gone private in a transaction valued at $2,948,751,000

    So Joe, why is Cisco now paying $2.051 billion more for NDS when NDS now has -$689.5 million less in total assets than it did earlier when taken private (2011-2008)?

    Perhaps Cisco is paying $2 billion more because NDS annual revenue has grown a whopping +18.32% (i.e. $148 million), while NDS annual operating income has grown a stunning +35% (i.e. $63.6 million) since being taken private (2011-2008).

    I mean, in its most recent 6 months, NDS grew revenue year-over-year by an astronomical +7.32% (i.e. $32.55 million) and operating income year-over-year by an outlandish +4.5% (i.e. $5.46 million).

    However Joe, this is what really caught my attention about NDS:

    “During the six months ended December 31, 2011 and the fiscal years ended June 30, 2011 and 2010, our top ten clients accounted for approximately 72%, 65% and 72%, respectively, of our total revenue. We expect to continue to be dependent upon a limited number of clients for a significant portion of our revenue…”

    Joe, do you believe having 72% of your total revenue coming from ONLY 10 clients to be a good thing?

    Once more, in my opinion Cisco has just foolishly bet $5 billion against the success of OTT (Over-the-top content).

    Sincerely,

    Brad Reese

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