Communications infrastructure firm, CommScope, has agreed to buy Arris for a total purchase price of US$7.4 billion (€6.5 billion).
The US$31.75 per-share all-cash transaction includes the repayment of debt and asset management firm The Carlyle Group is contributing US$1 billion towards the financing of the deal, giving it a minority stake in CommScope.
Combined, CommScope and Arris would have had revenues of approximately US$11.3 billion and adjusted EBITDA of some US$1.8 billion for the 12-months ended September 30, 2018.
In a statement the companies said that the combined business will “shape the future of wired and wireless communications,” benefiting from developments like network convergence, fiber and mobility everywhere, the advent of 5G, and the Internet of Things.
“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 CEO, 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.”
Arris CEO 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.
“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 personalised, connected always-on consumer experience.”
CommScope and Arris together will hold approximately 15,000 patents and spend roughly US$800 million per year on research and development. The combined company is expected to serve customers across more than 150 countries.
The deal price represents a premium of approximately 27% on the average closing price of Arris’ common stock for the 30 trading days ended October 23, 2018 – the day prior to market rumours about a potential tie-up. The deal is expected to close in the first half of 2019, subject to customary closing conditions.
When complete, Edwards will continue as president and CEO of CommScope, with McClelland and other members of the Arris leadership team joining the combined company. CommScope will remain headquartered in Hickory, North Carolona, and the combined company will maintain a significant presence in Suwanee, Georgia.
The Carlye Group’s US$1 billion equity investment is equal to approximately 16% of CommScope’s outstanding shares. Cam Dyer, Carlyle managing director and global co-head of technology, media and telecoms said: “We are delighted to resume our collaboration with CommScope’s accomplished management team. We believe in the company’s long-term strategy, customer-centric culture and ability to deliver results.”