Swiss-based Kudelski said it will pay $226m to acquire rival conditional access provider, Conax AS, from Telenor Broadcast Holding AS.
This deal values Conax at approximately 2.2X revenue and 5.6X EBITDA.
In 2013 Conax had revenue of $103.7m, and EBITDA of $40.2m. In 2012 Conax had revenue of $96.1m and net income of $22.8m.
Kudelski, through its subsidiary Nagra, is one of the industry’s leading conditional access providers. The company also owns pay TV middleware provider OpenTV, which it acquired from Liberty Media.
Buying Conax gives Kudelski another 380 customers in 85 countries, who between them serve approximately 140 million pay-tv consumers through a product portfolio encompassing both traditional broadcast products and complete solutions for multi-screen TV distribution.
André Kudelski, CEO of the eponymous company, says the addition of Conax will enable Kudelski to “further expand our customer portfolio in Asia, Latin America, Eastern Europe and Scandinavia.”
The deal will also help bolster Kudeslski’s pay TV revenue, which has been in decline.
In 2013 Kudelski reported pay TV-related revenue of $695m, down 4.4% versus 2012, including a year-on-year decline of 7.7% in Europe. In its 2013 annual report, Kudelski said that it expects weak fundamentals in Europe to continue to affect volumes in its core digital TV market. Thus the addition of Conax makes sense for Kudelski.
The deal also makes sense for Telenor, which says that despite “a strong track record of international growth and high profitability, achieving global scale and enhancing market share will be key determinants of future success” in the highly competitive conditional access business. Therefore Telenor has decided “the best way forward for Conax is with a new owner.”
Telenor says selling Conax “marks an important step for Telenor Broadcast in pursuing its stated strategy of focusing on its core activities within the Telenor Group.” One of Telenor’s core businesses, Canal Digital, will remain a Conax/Kudelski customer after the transaction.
The transaction is expected to close within 10 days.
Press Release: Kudelski Group to Acquire Conax
Press Release: Telenor Broadcast divests Conax to Kudelski Group for NOK 1.5 billion
Press Release: Kudelski Group 2013 Annual Results
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