Arris acquired Pace, based in Saltaire, UK, in a merger in 2015 to sit alongside Motorola’s set top business that Arris bought from Google. Pace shareholders ended up with 24% of the enlarged company.
The deal brings together several elements of the former General Instruments to insulate the different divisions from global challenges. For example Arris recently warned that the shortage of MLCC ceramic capacitors was a major issue. The Motorola business was acquired from GI, and CommScope was the spin off of GI’s cabling business. CommScope also includes antenna maker Andrew and connector maker TE Connectivity.
The combined CommScope and ARRIS would have a turnover of approximately $11.3 billion and profits of $1.8bn.
The deal also allowed private equity asset manager The Carlyle Group, to reestablish an ownership position in CommScope through a $1 billion minority equity investment.
The combined company is expected to drive profitable growth in new markets, shape the future of wired and wireless communications, and position the new company to benefit from key industry trends, including network convergence, fibre and mobility everywhere, 5G, Internet of Things and rapidly changing network and technology architectures.
ARRIS combines hardware, software and services to enable advanced video experiences and constant connectivity across a variety of environments – for service providers, commercial verticals, small enterprises and the people they serve. Last year it bought Ruckus Wireless to move into the enterprise wireless business, but last year the set top box business at $3.9bn was over half the $6.7bn turnover.
“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.”
“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,” said Bruce McClelland, CEO of ARRIS. “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 and ARRIS will share strong technical expertise with approximately 15,000 patents and approximately $800m in average annual research and development investments, but expects to make cost savings of at least $150m within three years, with saving of more than $60m in the first year.
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