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NDS Makes Rare Acquisition

By | June 19, 2002

      NDS has acquired interactive TV application software company VISIONIK in a deal worth up to $14 million. VISIONIK has built its reputation in recent years on enhanced TV shows and games services.

      NDS CFO Rick Medlock told Interspace: “The acquisition will cost between $8 and $14 million for the overall acquisition of the company. It will be funded out of cash out of NDS’ existing resources. The variable consideration element of it is dependent on achieving certain financial targets such as revenues and minimum profitability thresholds over the next two years. We have about $75 million in cash on the balance sheet.”

      The deal gives NDS expertise in digital interactive services and head-end software working across satellite, terrestrial and cable platforms. VISIONIK runs enhanced games and set-top box applications on more than 14 networks around the world. Medlock admitted that NDS has “adopted a fairly cautious approach” towards acquisitions but this was one that was too good to turn down. He said: “We have been looking to fill a hole in our interactive application portfolio because games is really something that is getting traction with viewers and consumers. It is generating revenues for channels and pay-TV operators and therefore it is something that we have sensed that we have needed for some time.”

      It is unlikely that even with its cash reserves, NDS will look to do many more acquisitions. Medlock said, “We believe some people have been doing deals at high valuations and NDS is not prepared to do that. Our strategy is not to go through acquisition, but to grow organically.”

      The deal should enable NDS to have a greater presence in continental Europe. It hopes to bring some of VISIONIK’s applications into its operator customer base, but it will also work the other way. Medlock explained: “They have got a good strong leadership position in games. They have got some good customer relationships. They are strong in continental Europe where NDS does not have much of a presence. So, we think there is a good fit in that respect. It gives us an ‘in’ to talk to some operators about conditional access.”

      The company is based in Denmark, so NDS is hoping to use the company in order to help strengthen its position. Medlock said: “Their Nordic presence was certainly a benefit although not the main thrust for the acquisition. We don’t have any customers in Scandinavia so this is a good ‘in’ into that area.”

      –Mark Holmes

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