France's Technicolor to buy Cisco's connected devices unit for $602 million

The Cisco Systems logo is seen as part of a display at the Microsoft Ignite technology conference in Chicago, Illinois, May 4, 2015.

/Jim Young

French media and entertainment technology group Technicolor said on Thursday it had signed an exclusive deal with Cisco to buy its home equipment business for 550 million euros ($602 million) in cash and stock.The deal will beef up Technicolor's position in home video and communications products, doubling annual revenue at its Connected Home division and giving it 290 million set-top boxes installed in over 100 countries, the company said.The transaction is expected to close by the end of the fourth quarter of 2015 or during the first quarter of 2016.Following its completion, Technicolor said its Connected Home division should reach adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in excess of 200 million euros by the end of 2016, and an adjusted EBITDA margin of 8-9 percent by 2017. The deal will also boost earnings per share by a double-digit percentage at group level starting in the first full year after closing, Technicolor said. Under the terms of the deal, Cisco will receive about 413 million euros in cash and about 137 million euros in newly issued Technicolor shares, subject to certain adjustments provided for in the agreement. The 413 million cash portion will be financed through cash on hand and fully-underwritten new debt. ($1 = 0.9142 euros) (Reporting by Dominique Vidalon; Editing by Muralikumar Anantharaman and Pravin Char)