A company backed by private-equity outfit Permira is to acquire Cisco’s service provider video software solutions business, with former NDS chairman and CEO Abe Peled to return as chairman of the new venture.
When the deal closes, the Permira Funds will create a rebranded company focused on technology for the pay TV industry. Its product lines will encompass Cisco’s Infinite Video Platform, cloud digital video recording, video processing, video security, video middleware, and services groups.Peled has been acting as advisor to the funds.
The sale of the video business has been approved by Cisco’s board. The company will retain video and media technology assets that are related to its core business in networking , multi-cloud, security, data and collaboration.
The deal is expected to close in Cisco’s financial first quarter for the 2019 financial year, meaning the third calendar quarter of this year.
Reports that Cisco was planning to sell the former NDS Group emerged in November, when Bloomberg reported that it was soliciting offers for the unit, which it acquired for US$5 billion five years previously.
Cisco had earlier sold its set-top box and consumer hardware division, based on its earlier acquisition of Scientific-Atlanta, to Technicolor for €560 million, having acquired that unit for US$6.9 billion in 2005.
Terms of the former NDS Group sale have not been disclosed, but are also likely to involve a massive discount on the purchase price.
In a blog posting, Yvette Kanouff, SVP and general manager of Cisco’s service provider business, said that it was “the right time” for the service provider video group to become a standalone company. “I believe it will be very successful, and it will be focused solely on growth in this marketplace,” she said.
Kanouff also said that Peled would “a great steward to the board and to the business”.
She said Cisco remained “dedicated to the service provider business and to our service providers customers”.
In his prepared statement, Peled said that the new company would “have the scale, technology innovation, and world-class team to deliver outstanding go-to-market execution, customer engagement, and new end-user experiences”.
He said that Cisco had built “a profitable business” in the video space with innovations focused on IP distribution and cloud video.
“I am thrilled to be working again in this area with Permira who is committed to innovation and support for our Pay-TV customers, and look forward to the ongoing working relationship with Cisco in support of our mutual customers,” said Peled.
Cisco chairman and CEO Chuck Robbins said that the new company under Peled would be “well-positioned to drive this work forward and continue to deliver the solutions that meet the current and future needs of service provider video customers”.
Paolo Pescatore, VP, multiplay and media, CCS Insight, commenting on the deal, said: “Cisco follows Ericsson in selling its video business to a private equity firm. It is a reflection of the challenging landscape. There are too many solution providers chasing too few dollars. Bottom line, many of these solutions providers have diversified and now need to focus on core areas. Despite this, the media and telecoms industries are closer than ever. There will be more casualties due to further disruption. This represents an opportunity for other providers who still focus on connectivity and delivery of video over the Internet.”