British TV decoder maker Pace Plc said on Monday that it had made an
early-stage proposal to Internet group Google Inc to acquire its set-top
TV box maker Motorola Home.
"Discussions with Google are currently at
a preliminary stage and there is no certainty as to whether any
agreement regarding any transaction will be reached," Pace said in a
The offer is one of several bids for the unit,
including from private equity firms, that Google received on Friday,
according to a person familiar with the situation.
the set-top box maker as part of its $12.5 billion acquisition in May
of Motorola Mobility, which was largely motivated by a desire to snap up
its large portfolio of communications patents.
Motorola, Google has moved to revamp the company's loss-making mobile
phone business, while appearing less interested in the set-top business.
"It's a fine business, it's just not core to Google," said Pivotal Research Group analyst Brian Wieser.
and Cisco Systems Inc's Scientific Atlanta dominate the U.S. market for
cable television set-top boxes and for the back-end infrastructure that
manages the transmission of video signals to the boxes, said Wieser.
estimated that the Motorola's home business could fetch "in the
billions" of dollars, depending on how the deal is structured, such as
whether patents are included.
Arris Group, a cable equipment
maker, also made a bid for the business, according to a report by
Bloomberg. Arris Group and Google declined to comment.
world's No.1 Web search engine, has increasingly expanded into the
hardware business as consumers turn from their personal computers to
smartphones and other gadgets to access the Internet.
worked closely with companies such as Asus and LG Electronics to develop
Nexus-branded smartphones and tablets that Google sells directly on its
website. And Google has said it is shifting the emphasis at Motorola
Mobility's phone unit from low-end phones to more innovative
Some analysts had speculated that Google might use
the Motorola set-top box business to help it gain a foothold in the
living room, where its nearly three-year-old Google TV efforts have so
far failed to make a huge splash with consumers.
"It seems like it
would make sense to be able to integrate that into a set top box," said
Needham & Co. analyst Kerry Rice, referring to Google TV.
he said Motorola Home's customers cable providers and
telecommunications companies were different than the advertising
agencies and consumers that Google is accustomed to working with.
Motorola Home business generated $797 million in revenue in the third
quarter, according to Google's financial results, with $25 million in
Pace said its shares had been suspended from
trading in London as the potential acquisition would be classified as a
"reverse takeover" deal given the size of the acquisition relative to
A deal could help Pace recover from the three profit
warnings it issued in 2011 due to natural disasters such as flooding in
Thailand and the earthquake and tsunami in Japan that damaged the
group's supply chain.
"Pace already has a somewhat stretched
balance sheet, they have done a good job over the past 12 months to try
to pay down that debt but how they would finance such a large
acquisition is a question, but not an insurmountable one," said Numis
Securities analyst Nick James.
Shares of Google were just a shade higher in Monday afternoon trading, up 80 cents, or 0.1 percent, to $685.01
© Thomson Reuters 2012