CommScope Inc. signed a definitive agreement today with Avaya Inc. to acquire its Connectivity Solutions (ACS) busi...
October 27, 2003
CommScope Inc. signed a definitive agreement today with Avaya Inc. to acquire its Connectivity Solutions (ACS) business for cash and securities valued at approximately US $263 million.
ACS designs, develops, manufactures and markets enterprise structured cabling products for Local Area Network (LAN) applications.
ACS had revenues for the 12 months ended September 30, 2003 totaling US$542 million, according to Avaya’s public information, while CommScope, a manufacturer of broadband coaxial and fiber optic cable, had revenues of US$555 million for the same period.
Under the terms of the agreement, Avaya will receive US$210 million in cash, a US$18 million convertible subordinated note from CommScope and US$34.9 million in CommScope common stock, subject to adjustment.
The cash component of the transaction is expected to be funded primarily from CommScope’s existing cash balances and through a new US$150 million senior secured credit facility underwritten by Wachovia Securities. CommScope had US$171 million in cash and cash equivalents on its balance sheet as of September 30, 2003.
CommScope says it expects to incur incremental transition costs of approximately US$25 million during the first year of operating the ACS business, primarily related to information technology and other transition services.
“ACS is an excellent strategic fit and a logical step in the continued growth and development of CommScope as we execute our last mile strategy,” said Frank Drendel, chairman and chief executive officer of CommScope.
“This transaction represents a unique opportunity to acquire a preeminent industry player at an attractive valuation and establish CommScope as a global leader in the enterprise LAN area.