Telecom equipment maker CommScope Holding Co. announced Thursday that it has agreed to acquire Georgia-based ARRIS International for $7.4 billion to expand its business.
The combined company is projected to grow in new markets and aid in advancements for wired and wireless communications. The new company is seeking to benefit from industry trends, including network convergence, fiber and mobility accessibility, 5G networks, and evolving network and technology styles.
“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,” said CommScope CEO Eddie Edwards in a statement. “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.”
Hickory-based CommScope’s stock fell 20 percent, or $4.90, to $19.59 in Thursday morning trading after the deal was announced.
Based on results for the 12 months ending Sept. 30, the combination of CommScope and ARRIS is expected to create approximately $11.3 billion in revenue and adjusted EBITDA of approximately $1.8 billion.
“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,” said ARRIS CEO Bruce McClelland in a statement. “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.”
The transaction, which is expected to close in the first half of 2019, is expected to be more than 30 percent accretive to CommScope’s adjusted earnings per share by the end of the first full year after closing, excluding purchase accounting charges, transition costs and other special items.
CommScope is paying $31.75 per share for ARRIS. Its stock was trading at $27.79 at Wednesday’s close.
CommScope is a communications infrastructure that helps design, build and manage wired and wireless networks globally. The company has over 20,000 employees worldwide with a global customer base in over 130 countries.
In addition, The Carlyle Group, a former CommScope owner, is re-establishing a minority ownership position in the company through a $1 billion equity investment, equal to approximately 16 percent of CommScope’s outstanding shares.
