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Last Updated: Tuesday, 31 July 2007, 16:35 GMT 17:35 UK
BSkyB agrees 125m Amstrad deal
A Sky+ box made by Amstrad for BSkyB
BSkyB is Amstrad's main customer

Broadcaster BSkyB has struck a deal to buy television set-top box maker Amstrad for about 125m.

Amstrad, which was founded by the star of BBC One's The Apprentice, Sir Alan Sugar, supplies about 30% of the set-top box devices for Sky.

Orders from the broadcaster made up about 75% of Amstrad's sales in the year to the end of June.

Sky said that the deal meant they could now save money, design their products in-house and be more innovative.

Shares in Amstrad's rival set-top box maker Pace Micro Technology ended about 13% lower on the news, while Amstrad shares soared, closing 21.4% higher.

'Entrepreneurial spirit'

I cannot imagine a better home for the Amstrad business and its talented people
Sir Alan Sugar

Sir Alan, who is Amstrad's chairman and chief executive and owns 28% of the firm, will stay with the business.

He said the two companies had worked together for a long time.

"I cannot imagine a better home for the Amstrad business and its talented people," he said.

"Our companies share the entrepreneurial spirit of bringing innovation to the largest number of customers.

"Sky is a great British success story. I'm proud to have worked so closely with it, and I look forward to continuing to play a part in this exciting business."

BSkyB said the deal would "significantly" reduce costs in its supply chain.

It would also give it improved control over the design and specification of products and more flexibility to continually improve the technology, it added.

"It will help us to drive innovation and efficiency for the benefit of our customers," chief executive James Murdoch said.

Other innovations

Founded by Sir Alan as an electrical goods retailer in 1968, Amstrad listed on the London Stock Exchange in 1980. Its name is an acronym of Alan Michael Sugar Trading.

The company launched a home computer package aimed at the mass market in the mid-1980s and was Sky's first supplier when the broadcaster launched in 1988.

Sir Alan Sugar and James Murdoch
Sir Alan and James Murdoch are happy with the deal

Besides set-top boxes, its recent products have included the E3 videophone.

This followed on from the E-mailer phone, which allowed e-mail, internet, pictures and video calls but did not find massive commercial success.

Last month, Sir Alan sold his stake in Premier League club Tottenham Hotspur for 25m.

Most of his current wealth comes from his property portfolio in Mayfair, the aviation firm Amsair and property investment group Amsprop.

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