CommScope, an infrastructure solutions provider for communications networks, recently announced it will acquire entertainment and communications solutions provider ARRIS. The all-cash transaction was for $31.75 per share, or a total purchase price of approximately $7.4 billion, including the repayment of debt, according to a company release. Meanwhile, global alternative asset manager The Carlyle Group reestablished an ownership stake in CommScope through a $1 billion minority equity investment as part of CommScope’s financing of the transaction.
By teaming up, CommScope and ARRIS created a company with approximately $11.3 billion in revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.8 billion. These figures are based on both companies’ results for the 12 months that concluded in September of this year.
The newly formed company expects to drive profitable growth in new markets, shape the future of wired and wireless communications and position the new company so it can benefit from key industry trends that include network convergence, fiber, omnipresent mobility, 5G, Internet of Things (IoT) and rapidly changing network and technology architectures.
“CommScope realizes the importance of the CBRS opportunity and the role that ARRIS can play,” BTIG TMT analyst Walt Piecyk told Connected Real Estate Magazine.
ARRIS is an innovator in numerous categories including broadband, video and wireless technology. The company combines hardware, software and services to enable advanced video experiences and constant connectivity across numerous environments that include service providers, commercial verticals, small enterprises and the people they serve. ARRIS has strong leadership positions in customer premises equipment (CPE), network and cloud (N&C) and enterprise networks—incorporating the recently acquired Ruckus Wireless® and ICX Switch ® businesses and focusing on wireless and wired connectivity, including Citizens Broadband Radio Service (CBRS) solutions.
“After a comprehensive evaluation of our business and the evolving industry we operate in, we are confident that combining with ARRIS is the best path forward for CommScope to grow and provide the greatest returns for shareholders,” Eddie Edwards, CommScope president and chief executive officer said in a statement. “CommScope and ARRIS will bring together a unique set of complementary assets and capabilities that enable end-to-end wired and wireless communications infrastructure solutions that neither company could otherwise achieve on its own. With ARRIS, we will access new and growing markets, and have greater technology, solutions and employee talent that will provide additional value and benefit to our customers and partners.”
“CommScope is an ideal partner for ARRIS,” ARRIS chief executive officer Bruce McClelland added. “In addition to providing immediate and substantial cash value to our shareholders, we are excited for what this combination will deliver for our customers, partners and employees around the world. Today’s agreement is a testament to the strength of ARRIS, our leading technology, talented employees and established a competitive position.
“With CommScope, we expect to further advance ARRIS’ strategy to drive innovation across our iconic brands and pioneer the standards and pathways for tomorrow’s personalized, connected always-on consumer experience. ARRIS will become part of an even stronger, more global industry leader, and I look forward to working with the CommScope team to achieve great results for the combined company.”
CommScope and ARRIS view the transaction as an opportunity to fuel not only their respective companies’ growth, but also expand shareholder value and customer benefits. Some of the transaction’s benefits include the companies being positioned to capitalize on positive industry trends; the ability to unlock significant, high-growth segments and increase the product accessible market; and expand product offerings and research and development (R&D) capabilities to meet the needs of their diversified customer base. Acquiring ARRIS also allows CommScope to maintain its strong balance sheet, credit position and financial flexibility.
When the acquisition is complete, Edwards will remain president and CEO of CommScope. McClelland and other members of the ARRIS leadership team will join the combined company. CommScope’s headquarters will stay in Hickory, NC. CommScope will continue to be led by a board of directors and management team that leverages both companies’ strengths.
“CommScope and ARRIS share a customer-first culture that emphasizes innovation, made possible by incredibly talented and experienced teams of people,” Edwards said. “As we have with numerous transactions in the past, we expect to work together with Bruce McClelland and the ARRIS team to create a best-in-class management team and achieve a seamless integration. Together, CommScope and ARRIS will be well positioned to serve a more diverse set of customers and generate substantial value for our shareholders.”