Transaction Expands Total Addressable Market to
More Than $60 Billion and Extends Global Reach
Expected to be Significantly Accretive to
CommScope’s Adjusted EPS and Exceed $150 Million in Annual Run-Rate
Cost Synergies in Year 3
CommScope (NASDAQ: COMM), a global leader in infrastructure
solutions for communications networks, has completed its
acquisition of ARRIS International plc (NASDAQ: ARRS), a global
leader in entertainment and communications solutions.
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the full release here:
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CommScope, a global leader in
infrastructure solutions for communications networks, has completed
its acquisition of ARRIS International plc, a global leader in
entertainment and communications solutions. Combined with ARRIS,
CommScope is expected to drive profitable growth in new markets and
shape the future of wired and wireless communications. (Graphic:
Business Wire)
Combined with ARRIS, CommScope is expected to drive profitable
growth in new markets and shape the future of wired and wireless
communications. With the completion of this transaction, CommScope
will be better positioned to benefit from long-term industry growth
trends, including network convergence, fiber and mobility
everywhere, 5G, Internet of Things and rapidly changing network and
technology architectures.
The acquisition brings together two companies—established and
respected leaders in their respective markets—with a unique set of
complementary assets and capabilities that are expected to enable
end-to-end communications infrastructure and connectivity
solutions, something that neither company could achieve on its own.
The combination of the companies, which includes Ruckus Networks,
is expected to create new opportunities across multiple markets,
while increasing the companies’ relevance and importance with
existing networking customers.
CLICK TO TWEET: The combination of CommScope, ARRIS and
Ruckus will unleash more potential, capabilities and success for
your networks.
In addition to creating long-term growth opportunities, the
acquisition also is structured to deliver near-term financial
benefits to CommScope, including an expected 30-plus percent
accretion to adjusted earnings per share in the first full year
post-close and annual cost synergies of at least $150 million
within three years. Pro forma 2018 revenues of the combined company
were approximately $11.3 billion.
CommScope also is expected to generate nearly $1 billion of cash
flow from operations1 in the first complete year post-close, and
expects to use the free cash flow to aggressively pay down debt.
Through the completion of the transaction, CommScope has expanded
its product offerings and R&D capabilities, with the combined
company having approximately 15,000 patents and patent applications
globally and approximately $800 million in average annualized
R&D spending.
“This is a major milestone in the evolution of these two great
companies and a significant moment for our industry,” said Eddie
Edwards, president and chief executive officer, CommScope. “With
the completion of this exciting transaction, we are creating a new
CommScope that will help shape communications connectivity and
networks of the future with greater technology, solutions and
employee talent. We are committed to building on our
well-established track record in prior transactions of meeting or
exceeding our synergy targets and generating significant value for
shareholders.
“We are focused on ensuring CommScope, with the fully integrated
ARRIS and Ruckus businesses, is at its best financially,
operationally and competitively. We are confident in our ability to
solidify our leadership positions in the markets we serve and
capitalize on opportunities in new markets. I look forward to
continuing to work closely with all of our employees, including our
new team members from ARRIS, as we strive to create a
growth-oriented, innovative company focused on leading the upcoming
network transformations.”
As previously announced, 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. In connection with the
closing of the transaction, Daniel F. Akerson and Campbell R. Dyer,
representatives of The Carlyle Group, have been appointed to the
CommScope board of directors, effective immediately.
“I believe this is a once-in-a-lifetime combination of two great
companies that are poised to make a lasting impact on the
communications industry and the customers we serve,” said Bruce
McClelland, formerly chief executive officer of ARRIS and now chief
operating officer at CommScope. “Together, we combine great
employee talent and experience, an impressive record of innovation
and industry firsts, and a sharp focus on creating a world-class
customer experience. The entire ARRIS team and I are eager to get
started and help make CommScope one of the top names in
technology.”
In connection with the closing of the transaction, trading of
ARRIS common stock was suspended and ARRIS requested that NASDAQ
file with the Securities and Exchange Commission a Notification of
Removal from Listing and/or Registration under Section 12(b) of the
Securities Exchange Act of 1934, as amended, on Form 25, thereby
commencing the process of delisting and deregistering the common
stock. ARRIS also intends to file a Form 15 to suspend its
reporting obligations under Section 15(d) of the Exchange Act and
to deregister its common stock under Section 12(g) of the Exchange
Act.
First Quarter 2019 Release Date
CommScope will release financial results for its first quarter
2019 on May 9, 2019. Given that the acquisition closed after the
quarter ended, CommScope will issue financial results on a
standalone basis for the first quarter, but intends to issue
guidance for the second quarter and full-year 2019 on a combined
basis.
About CommScope
CommScope (NASDAQ: COMM) and the recently acquired ARRIS and
Ruckus Networks are redefining tomorrow by shaping the future of
wired and wireless communications. Our combined global team of
employees, innovators and technologists have empowered customers in
all regions of the world to anticipate what’s next and push the
boundaries of what’s possible. Discover more at
www.commscope.com/arris-ruckus.
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1 Financial metrics presented are adjusted to exclude purchase
accounting charges, transaction and integration costs and other
special items.
This press release or any other oral or written statements made
by us or on our behalf may include forward-looking statements that
reflect our current views with respect to future events and
financial performance. These statements may discuss goals,
intentions or expectations as to future plans, trends, events,
results of operations or financial condition or otherwise, in each
case, based on current beliefs of management, as well as
assumptions made by, and information currently available to, such
management. These forward-looking statements are generally
identified by their use of such terms and phrases as “intend,”
“goal,” “estimate,” “expect,” “project,” “projections,” “plan,”
“potential,” “anticipate,” “should,” “could,” “designed to,”
“foreseeable future,” “believe,” “think,” “scheduled,” “outlook,”
“target,” “guidance” and similar expressions, although not all
forward-looking statements contain such language. This list of
indicative terms and phrases is not intended to be
all-inclusive.
These forward-looking statements are subject to various risks
and uncertainties, many of which are outside our control,
including, without limitation, risks related to the ARRIS
acquisition, our dependence on customers’ capital spending on data
and communication systems; concentration of sales among a limited
number of customers and channel partners; changes in technology;
industry competition and the ability to retain customers through
product innovation, introduction and marketing; risks associated
with our sales through channel partners; changes to the regulatory
environment in which our customers operate; product quality or
performance issues and associated warranty claims; our ability to
maintain effective management information technology systems and to
implement major systems initiatives successfully; cyber-security
incidents, including data security breaches, ransomware or computer
viruses; the risk our global manufacturing operations suffer
production or shipping delays, causing difficulty in meeting
customer demands; the risk that internal production capacity or
that of contract manufacturers may be insufficient to meet customer
demand or quality standards; changes in cost and availability of
key raw materials, components and commodities and the potential
effect on customer pricing; risks associated with our dependence on
a limited number of key suppliers for certain raw materials and
components; the risk that contract manufacturers we rely on
encounter production, quality, financial or other difficulties; our
ability to integrate and fully realize anticipated benefits from
prior or future divestitures, acquisitions or equity investments;
potential difficulties in realigning global manufacturing capacity
and capabilities among our global manufacturing facilities or those
of our contract manufacturers that may affect our ability to meet
customer demands for products; possible future restructuring
actions; substantial indebtedness and maintaining compliance with
debt covenants; our ability to incur additional indebtedness; our
ability to generate cash to service our indebtedness; possible
future impairment charges for fixed or intangible assets, including
goodwill; income tax rate variability and ability to recover
amounts recorded as deferred tax assets; our ability to attract and
retain qualified key employees; labor unrest; obligations under our
defined benefit employee benefit plans requiring plan contributions
in excess of current estimates; significant international
operations exposing us to economic, political and other risks,
including the impact of variability in foreign exchange rates; our
ability to comply with governmental anti-corruption laws and
regulations and export and import controls worldwide; our ability
to compete in international markets due to export and import
controls to which we may be subject; the impact of Brexit; changes
in the laws and policies in the United States affecting trade,
including recently enacted tariffs on imports from China, as well
as the risk and uncertainty related to other potential tariffs or a
potential global trade war that may impact our products; costs of
protecting or defending intellectual property; costs and challenges
of compliance with domestic and foreign environmental laws; the
impact of litigation and similar regulatory proceedings that we are
involved in or may become involved in, including the costs of such
litigation; risks associated with stockholder activism, which could
cause us to incur significant expense, hinder execution of our
business strategy and impact the trading value of our securities;
and other factors beyond our control. These and other factors are
discussed in greater detail in our 2018 Annual Report on Form
10-K.
Such forward-looking statements are also subject to additional
risks and uncertainties related to ARRIS’ business, many of which
are outside of our and/or ARRIS’ control, including, without
limitation: the risk that we will not successfully integrate ARRIS
or that we will not realize estimated cost savings, synergies,
growth or other anticipated benefits, or that such benefits may
take longer to realize than expected; risks relating to
unanticipated costs of integration; the potential impact of
announcement or consummation of the acquisition on relationships
with third parties, including customers, employees and competitors;
failure to manage potential conflicts of interest between or among
customers; integration of information technology systems; and other
factors beyond our and/or ARRIS’ control.
Although the information contained in this press release
represents our best judgment as of the date hereof based on
information currently available and reasonable assumptions, we can
give no assurance that the expectations will be attained or that
any deviation will not be material. Given these uncertainties, we
caution you not to place undue reliance on these forward-looking
statements, which speak only as of the date made. We are not
undertaking any duty or obligation to update this information to
reflect developments or information obtained after the date of this
release, except as otherwise may be required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20190404005426/en/
News Media Contacts:Rick Aspan, CommScope+1
708-236-6568publicrelations@commscope.comInvestor
Contacts:Kevin Powers, CommScope+1
828-323-4970Kevin.powers@commscope.com
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