LONDON Satellite broadcaster BSkyB is buying, for £125 million, one of its largest set top box suppliers, Amstrad. The surprise deal will see Amstrad pass from the hands of one iconic name in British business to another, the Murdoch family.
Amstrad, which was founded by consumer electronics entrepreneur Sir Alan Sugar, supplies about 30 percent of the set-top box devices for Sky, and sales of these represented about 75 percent of Amstrad's sales in the year to the end of June.
Sky said that the deal meant they could now design their products in-house and be more innovative. The company expects the deal to reduce the cost of procuring its set top boxes now and in the future, and to add to its bottom line in the first year.
The two companies have been working together for some time.
Sir Alan, who is Amstrad's chairman and chief executive and founded the company in 1968, owns 28 percent of the shares in the company.
"I cannot imagine a better home for the Amstrad business and its talented people. Our companies share the entrepreneurial spirit of bringing innovation to the largest number of customers," Sir Alan said.
Sir Alan will not be fired. He and Amstrad's senior executives will continue to run the business for Sky if the deal goes through.
BSkyB chief executive James Murdoch said the deal would "help us to drive innovation and efficiency for the benefit of our customers".
Amstrad launched the first home computer package aimed at the mass market in the mid 1980ís and besides set-top boxes, recent products have included the E3 videophone. However, the company was squeezed out of the PC market by larger competitors.
This followed on from the E-mailer phone, which allowed e-mail, internet, pictures and video calls but did not find massive commercial success.