ARRIS to acquire BigBand Networks
ARRIS Group, Inc. (NASDAQ:ARRS) has agreed to purchase video switch technology provider BigBand Networks (NASDAQ:BBND) for $2.24 per share in cash. The price equates to a diluted equity value of approximately $172 million, or $53 million net of estimated BigBand cash on hand.
ARRIS Group, Inc. (NASDAQ:ARRS) has agreed to purchase video transport technology provider BigBand Networks (NASDAQ:BBND) for $2.24 per share in cash. The price equates to a diluted equity value of approximately $172 million, or $53 million net of estimated BigBand cash on hand.
BigBand, based in Redwood City, CA, asserts it has more than 200 customers in North America, Asia, and Europe, including eight of the ten largest cable and telco service providers in North America.
ARRIS cites BigBand's ability to extend ARRIS's existing capabilities in the processing, management, and distribution of digital video content as a catalyst for the deal. The new assets will further ARRIS’s efforts in such product areas as the Converged Cable Access Platform (CCAP) architecture, local and targeted advertising, IP video distribution, and advanced video processing and compression.
"We are both enthusiastic and optimistic about the BigBand acquisition because it builds on our stated business strategy of growing our current businesses into a more complete portfolio including a strong video product suite and investing in the evolution towards network convergence onto an all IP platform," said Bob Stanzione, ARRIS chairman and CEO. "In addition, the acquisition offers new opportunities to expand our customer base worldwide. We are delighted to welcome the BigBand employees to ARRIS."
The company expects the acquisition to cut costs through “meaningful operating synergies,” including the elimination of public company costs and the alignment of sales, marketing, and R&D initiatives. ARRIS projects the deal will be neutral to accretive on a non-GAAP basis for ARRIS shareholders by mid-2012 and will offer upside potential subsequently.
ARRIX plans to make a tender offer for all of the outstanding shares of BigBand within 10 business days. The full transaction will be subject to customary closing conditions, including the acquisition of a majority of BigBand's shares and the receipt of antitrust clearance in the United States if applicable. The board of directors of BigBand has unanimously recommended that BigBand shareholders accept the offer. In addition, Redpoint Ventures and ValueAct Capital Partners, holders of 32% of the outstanding shares of BigBand, have agreed to tender their shares in the offer and to vote their shares in favor of the merger agreement and against any other transaction, subject to the provisions of the agreement.
ARRIS expects to close the deal late this year.