CommScope (NASDAQ:COMM) has agreed to acquire ARRIS (NASDAQ:ARRS) in an all-cash transaction for $31.75 per share, or a total purchase price of approximately $7.4 billion, including the repayment of debt. Rumors of the deal first surfaced during Cable-Tec Expo in October.
In addition, The Carlyle Group, a global alternative asset manager, has reestablished an ownership position in CommScope through a $1 billion minority equity investment as part of CommScope's financing of the transaction.
The combination of CommScope and ARRIS, on a pro forma basis, would create a company with approximately $11.3 billion in revenue and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of approximately $1.8 billion, based on results for the two companies for the 12 months ended Sept. 30.
"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," said Eddie Edwards, president and chief executive officer, CommScope. "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 and ARRIS share a customer-first culture that emphasizes innovation, made possible by incredibly talented and experienced teams of people. 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."
ARRIS Chief Executive Officer Bruce McClelland said: "CommScope is an ideal partner for ARRIS. 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 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 expects the combined company to more than double its total product addressable market to more than $60 billion, with complementary assets and capabilities including:
- Converged small cell solutions for licensed and unlicensed wireless spectrum
- Complementary wired and wireless communications infrastructure
- Integrated broadband access
- Private network solutions for industrial, enterprises and public venues
- Connected and smart home solutions
CommScope and ARRIS together have approximately 15,000 patents and approximately $800 million in average annual research and development investments. With a stronger global footprint, the combined company is expected to serve customers across more than 150 countries.
Following completion of the combination, Eddie Edwards will continue in his role as president and chief executive officer of CommScope, with ARRIS CEO Bruce McClelland and other members of the ARRIS leadership team joining the combined company.
CommScope will remain headquartered in Hickory, NC, and the combined company will maintain a significant presence in Suwanee, GA. Upon completion of the transaction, CommScope will be led by a board of directors and management team that leverage the strengths of both companies. The transaction, which is expected to close in the first half of 2019, is subject to customary closing conditions and regulatory and shareholder approvals.
