MUMBAI: Tandberg Television has signed a definitive agreement to acquire SkyStream, the Sunnyvale, CA headquartered leader in IP video delivery solutions.

Under the terms of the agreement, Tandberg Television will acquire privately-held SkyStream for a mix of cash and Tandberg Television shares. The total consideration will be $80 million and the completion of the transaction is subject to a number of standard conditions. The transaction is expected to close in April 2006.

SkyStream employs approximately 100 people across North America and in the UK, China and Korea. Founded in July 1996, SkyStream has delivered seven years of sequential revenue growth and achieved profitability in Q4 2005. The company posted 2005 revenues of $30.7 million, up 43 per cent on 2004, and with a gross margin of 65 per cent.

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The move brings together two highly respected players in digital video delivery and will extend Tandberg Television’s position as the global leader in the professional video compression market. Through the acquisition Tandberg Television will expand its technology offering for IPTV and also for the cable, satellite DTH and on-demand markets with a highly complementary product set from SkyStream, the industry’s fastest-growing provider of IP video solutions with over 300 customers worldwide.

“The sands are shifting in the digital media market and there is an inevitable level of industry consolidation taking place. In a marketplace with a number of acquisition opportunities to pursue, we chose to acquire SkyStream because of the company’s best-in-class technologies and its strong culture of building revenue and profitable growth,” says Tandberg Television president and CEO Eric Cooney.

A recognised pioneer in IP content delivery, SkyStream’s high density Mediaplex-20 and iPlex switched digital video headends for MPEG-2/MPEG-4 AVC encoding and transcoding are used extensively by IPTV operators in Asia, Europe and the US. These solutions deliver lower cost, higher-density solutions to cable and satellite operators and will be a valuable extension to Tandberg Television’s DTH head end systems and its industry leading MPEG-4 AVC HDTV compression solutions.

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In addition, SkyStream’s zBand content delivery software for push on-demand services is highly complementary to the Tandberg N2 On-Demand solutions and gives the company a complete ‘push and pull’ on-demand offering.

Tandberg Television and SkyStream already share a number of common customers and the companies’ solutions sit side-by-side in telco and satellite networks and combine to enable operators to deliver advanced IPTV and HDTV services. The acquisition will mean that Tandberg Television is better equipped than ever to meet its customers’ needs with fully integrated systems supported by its high quality systems delivery and integration services.

The move will also increase Tandberg Television’s global sales presence and strengthen its successful commercial organizations in North America, EMEA and APAC. The company will also add over 50 talented SkyStream engineers who will continue to work at their current sites including SkyStream’s Sunnyvale HQ which provides Tandberg Television with a Silicon Valley beach-head, bringing the company closer to its US customers and to a strong pool of future recruits and partners.

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SkyStream’s customers include Safeway, Reuters, GlobeCast (a division of France Telecom), EchoStar Communications Corporation, Comcast, BT Broadcast Services, Belgacom, Clear Channel, Convergent Media, Eutelsat, Gilat, New Skies Satellites, ViaSat, Loral Skynet, EMS, Rural Telephone, CCTV, Shanghai Stock Exchange and Telecom Italia.