Aurora Networks and Harmonic Inc. (NASDAQ: HLIT) have signed an agreement through which Harmonic will sell its cable access business to Aurora Networks for $46 million in cash. The two parties expect the transaction to close by the end of the first quarter of 2013.
The cable access portfolio includes optical transmitters, amplifiers, receivers, and nodes. Harmonic admits that it doesn’t lead the market in these areas. Nevertheless, the cable access business generated $52.9 million of net revenue with gross margin of approximately 30% in calendar year 2012.
Meanwhile, the products complement Aurora Networks’ line of fiber-based access network systems for cable operators. “Acquiring the assets of Harmonic’s optical transport business extends our access leadership position by adding to our footprint within the cable industry,” said Guy Sucharczuk, chairman, president, and CEO of Aurora Networks. “We are dedicated to the evolution of cable infrastructure. This strategic move is an opportunity for us to further accelerate our innovations, continue to grow, and ensure that the networks of current customers and expanded customer base from Harmonic can meet challenges today and well into the future.”
Aurora Networks has been aggressive in expanding its product scope via acquisition. The company bought the PON systems line of Enablence in August 2011 (see “Aurora Networks buys Trident7 PON line from Enablence Technologies”).
Harmonic expects to recognize in discontinued operations an after-tax gain of approximately $12 million to $14 million related to the sale. The net, after-tax cash proceeds from the sale are expected to be approximately $35 million. Harmonic will use the money for a share repurchase program.
"The sale of the cable access business enables us to sharpen our focus on our largest growth opportunities,” said Patrick Harshman, president and CEO of Harmonic. “Cable access was Harmonic’s lowest margin product line, and through this transaction and the increase in our authorized share repurchase program, we will continue to drive growth in our core markets, expand our gross margin, reduce our outstanding shares, and position our business for stronger long-term earnings.”
For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer's Guide.