Pace takeover target?

[Larry-G]

The Pace share price has jumped as the London stockmarket is alive with rumours that the world’s largest supplier of STBs is a firm take-over target and BSkyB, Cisco Systems and private equity firms are reportedly interested in acquisition. Pace’s share price has been highly volatile this past week, at one stage on August 25th hitting 105p before falling back to 99.6p.



Pace has been made vulnerable by its relatively poor capital value on the market and predators obviously feel it doesn’t represent the true enterprise value of the business. Pace’s market cap is just £303.6m and analysts suggest a target price of 150p might be paid. The price has suffered first after poorly presented results lead to an unnecessary panic over delayed orders, and then by news of Google’s takeover of Motorola, with some assuming this meant the search giant would simply muscle in on the STB market.



However, assorted reports from brokers all agree that the decision to deploy software from any vendor ultimately rests with the cable operator. MMI (Motorola Motobility Inc) cannot force its MSO customers to buy MMI STBs loaded with Google software. Furthermore, using an external software supplier would lead to the consideration of others as well, including Microsoft, AAPL, ROVI, TIVO, and possibly others, irrespective of the underlying STB,” said one analyst.