Consolidation isn’t just for distributors. Arris is plunking down $2.1bln in cash and stock for Pace, giving it a foothold in the satellite space as well as an increased international presence. “We’ve been looking at ways to grow the company forever. We finished 2 years ago the acquisition of Motorola Home. It’s time to move on” to something else, Arris chmn/CEO Bob Stanzione said in a call with analysts Wed following the after-the-bell announcement. “The timing is perfect. The capital markets are in a very giving state now.” While Arris will gain satellite customers such as DirecTV, Pace and Arris have overlap in the US cable operator space—notably with Comcast, which uses both vendors for its X1 gateways. Stanzione compared it to Arris’ 2013 $2.3bln acquisition of Motorola Home, saying that the combined product lines and roadmaps helped accelerate innovation of new products.

On the international front, more than 40% of Pace’s business is outside the US compared to under 30% for Arris. When it comes to satellite, Arris has no business in the US right now and a small amount internationally. It’s an area it has been trying to target strategically for the past 2-3 years, Stanzione said. The deal, which has a $20mln break-up fee attached, also gives Arris Aurora Networks, which Pace bought in 2013 for $310mln as a way to enter the access network space. This is a complex transaction that will include regulatory approval in multiple countries, yet Stanzione was clear that Arris “isn’t closing the door” on other potential transactions. Just last week, Arris and Charter announced their acquisition of ActiveVideo for $135mln through a jv.

The Pace transaction, which is expected to close in late 2015, will result in New Arris. It will be incorporated in the UK, but the operational and worldwide headquarters will remain in Suwanee, GA. Stanzione will be New Arris chmn/CEO, and the current Arris board of directors will be the new company’s board of directors. It’s expected to be listed on the NASDAQ as “ARRS.” The combined company is estimated to have $8bln in pro forma revenues, with 8500 global employees. Pace shareholders will receive approximately 48.2mln shares of New Arris in aggregate. On a pro forma basis, current Arris shareholders will hold about 76% of New ARRIS and Pace shareholders will hold about 24% of New Arris.

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