Cisco to acquire NDS Group

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Cisco Systems plans to acquire video-software specialist NDS Group for about $5 billion in a deal that would advance the computer networking giant’s move into next-generation video services.

NDS makes the software used by cable and satellite companies to deliver video securely to television set-top boxes. Its customers include DirecTV and British Sky Broadcasting, the largest pay television operator in Britain. Cisco said the acquisition would complement its Videoscape technology for delivering entertainment in the home.

Under terms of the deal, Cisco said it would pay approximately $5 billion, including the assumption of about $1 billion in debt. The acquisition has been approved by the boards of directors of both companies.

News Corp. owns a 49% stake in NDS, with the rest owned by Permira Advisers LLP. The media company and the private equity firm took the pay-television technology company private in 2008 in a transaction valued at $3.7 billion.

The media conglomerate and Permira issued a statement Thursday morning that they agreed to sell NDS.

Wall Street analyst Todd Juenger wrote that the sale is a positive development for News Corp., which would realize a pretax gain of about $1.5 billion from the sale. Juenger noted that ‘it makes sense to sell its equity stake completely,’ as an asset that’s not core to the company’s media business, which spans newspapers, broadcast and cable television assets and a film studio.

As part of its purchase of NDS, Cisco would acquire operations in the United Kingdom, Israel, France, India and China. Its approximately 5,000 employees will join the Cisco’s Service Provider Video Technology Group.

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Image of Cisco Chief Executive John Chambers talks about the future of TV at the Consumer Electronics Show in 2011. Credit: Jacob Kepler/Bloomberg.

-- Dawn C. Chmielewski