What began as a potential partnership has instead turned out to be an acquisition for Liberate Technologies, which yesterday agreed to buy Sigma Systems Group for US$62 million.
Sigma Systems is a privately held Toronto-based software company that provides management solutions and the integration of point technologies for cable system operators. Some of its customers include AT&T Broadband, Rogers Cable, Shaw Cable and Comcast. Sigma has been providing Comcast with all of its voice-over-IP capabilities.
From its headquarters in San Carlos, Calif., Liberate provides infrastructure for a mix of IP-based services and content to the television industry.
The deal, expected to close in about a month, would bring the total employee count to approximately 700 and combine the 20 cable company customers the two organizations did share.
“This allows us to do end to end as no other competitor in the industry can. To integrate this complete solution together (and) to enable the cable companies to define, create, launch and manage digital services, video services, data services and voice services (together),” said Mitchell Kertzman, chairman and CEO at Liberate Technologies during a teleconference call.
However, while it was suggested the two companies might form a partnership, one former Sigma employee said there were rumblings at Sigma months ago that Liberate would buy the company outright. Sigma owners had shopped the company in search of a buyer, and the spokesperson said that 10 people were all let go several months ago, and a massive 25 per cent lay-off was anticipated if a buyer wasn’t found. Ultimately, the only reason a deal wasn’t struck sooner was the selling price.
“The owners wanted to sell out because the growth curve they had anticipated in terms of revenue just wasn’t coming through in the cable industry and (because) of companies like Adelphia Communications Corp.”, he said.
With a limited competition field that includes Microsoft and OpenTV, one industry analyst said the move will certainly benefit Liberate.
“This is an interesting addition when you take and add their product and the OSS capabilities of Sigma. It’s a very nice match,” said Elroy Jopling, principal analyst at Gartner Data Quest in Toronto.
On the customer side, Jopling said he’s equally optimistic, since existing Sigma clients will benefit from the wider array of capabilities Liberate can now offer.
Sigma Systems can be reached at http://www/sigma-systems.com
Liberate is at http://www.liberate.com