ADB acquires Pirelli Broadband

Set-top manufacturer ADB has struck a deal to acquire Italy-based Pirelli Broadband Solutions, beating off rivals including France’s Netgem.

ADB will pay €22m in cash and shares for the Pirelli unit. The deal will also include €8m of Pirelli Broadband’s agreed net cash position, taking the total value of the deal to €30m.

Pirelli Broadband Solutions supplies broadband gateways, IPTV set-top boxes, fixed/mobile convergence devices and broadband systems management solutions to the telecom operators in Europe and Latin America. The company’s revenues in 2009 were €132m.

ADB is looking to combine Pirelli’s expertise in broadband network management and gateway products with its own broadcast expertise to offer products catering to IP and broadband convergence.

ADB CEO François Pogodalla said that the strategic goal was to “combine broadcast and broadband to deliver a unified service experience” that would allow end users to move content around from one device to another and to enable operators to provide managed home networks as part of their service offering. He said the road map to combine the pair’s product offerings had still to be worked out in detail. However, he believed that the combination would enable ADB to target new markets, particularly in Asia, where service providers including cable operators were looking to deploy hybrid services.

Pogodalla said he did not necessarily believe in fully integrated set-top and gateway products because consumers typically looked for products that did single things well rather than integrated products that did everything. “I don’t believe that the capex optimization story in the home is so relevant because the consumer home is the one place where capital expenditure is the least optimized and organized,” he said.

ADB expects the deal to close by the end of the year, subject to regulatory approval.

ADB has separately said it expects revenues to be down between 5-8% on a year-by-year basis as a result of weakness in the digital-terrestrial market and a decision by one cable customer to run-down inventory ahead of deliveries of next-generation devices.