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US telecom technology company CommScope is in talks to acquire TV technology outfit Arris, according to a Reuters report, citing unnamed sources.

According to the report, interest in a combination is being driven by challenges faced by both parties, which are threatened by the commoditisation of a number of product lines.

CommScope, which was floated by private-equity owner Carlyle Group five years ago, saw its shares slide dramatically in May following a lowering of its full-year profit forecast.

Reuters said it was not clear how the technology outfit would fund any takeover, but speculated that stock would play a significant role in any agreement.

CommScope posted second quarter sales of US$1.24 billion, up 6%, and operating income of US$165 million. Last year, the company posted full-year revenues of US$4.56 billion. In 2017 Arris posted full-year sales of US$6.61 billion.

Speaking to analysts after CommScope’s Q2 results, recently appointed CFO Alexander Pease said that the company remained “committed to identifying and pursuing opportunities to drive solid growth in core and adjacent markets through innovation and accretive acquisitions”. He said that improved balance sheet flexibility had put CommScope in a position to drive mergers and acquisitions. “We want to use the strong balance sheet as a strategic weapon when these opportunities present themselves,” he said.

Asked about M&A in the Q&A session, Pease said that the company was “clearly able to consummate anything in the order of US$1 billion or so” but that it would continue to evaluate any opportunities in core and adjacent markets and was “open to potential opportunities that seem attractive”. He added that there was “noting imminent” in the pipeline.