CommScope Holding Company, Inc. (NASDAQ: COMM) says it has closed the acquisition of TE Connectivity's (NYSE: TEL) Broadband Network Solutions (BNS) business in an all-cash deal worth approximately $3 billion. CommScope had announced its plans to buy the assets, which focus on the telecom, enterprise, and wireless markets, this past January (see "CommScope pulls trigger on TE Connectivity Broadband Network Solutions buy").
The new assets help position CommScope to address four market areas:
- indoor and outdoor wireless networks
- data centers and central offices
- connected and efficient buildings
- access and backhaul networks.
"With this acquisition, we will have significant new opportunities for future sales growth and cost efficiencies to strengthen CommScope's financial foundation. The addition of the TE businesses is expected to immediately contribute to our profitable growth," said Eddie Edwards, CommScope president and CEO.
CommScope management has promised more than $150 million in annual synergies in 2018, including more than $50 million in 2016. The team further expects the deal to be more than 20% accretive in 2016 on a pro forma basis, excluding purchase accounting charges, integration costs, and other special items.
For the present, the BNS group will operate as one of CommScope's business segments. David Redfern will join CommScope to run the BNS group, reporting to CommScope COO Randy Crenshaw. Adding BNS will bring CommScope's head count to approximately 25,000.
For its part, TE Connectivity executives say the sale will enable the company to streamline its operations.
"Our strategy is focused on strengthening our leadership position in connectivity and sensor solutions, with an emphasis on harsh environment applications," said TE Connectivity Chairman and CEO Tom Lynch. "With the sale, 90% of our sales are derived from the attractive connectivity and sensor markets, and over 80% address harsh environments applications. These markets have strong underlying growth drivers as customers develop innovative products to meet the demands of a smarter, greener, safer, and more connected world."
TE Connectivity plans to use most of the $3 billion for share repurchase. The company will retain much of its fiber-optic network technology products, including active optical cables, optical transceivers, and Coolbit optical engines (see "TE Connectivity unveils Coolbit optical engines"), as well as its submarine network operations.
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