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Arris to Buy Tandberg TV for $1.2B

1/15/2007 4:03 AM Eastern

Arris Group announced plans Monday to acquire Tandberg Television in a cash-and-stock deal worth an estimated $1.2 billion, as both companies see advantages in pooling resources to battle larger rivals like Cisco Systems and Motorola.

The combined company would have about 1,625 employees and 2,000 customers in more than 100 countries. The deal is expected to be completed by the end of June, pending regulatory approvals.

Arris, based in Suwanee, Ga., near Atlanta, sells data, voice and video-networking equipment to cable operators. Tandberg, with U.S. operations in nearby Duluth, Ga., makes video-encoding equipment.

Arris is bidding 96 Norwegian kroner per share of Tandberg TV, which is traded on the Oslo stock exchange. Arris' offer is 83% in cash -- about $1 billion -- and the remainder in Arris stock, although Arris noted that it "can increase the cash portion of the offer at its discretion."

To finance the deal, Arris expects to issue an additional $520 million in convertible debt. In November, Arris raised $233 million in net proceeds from a debt offering; the company had $210 million in cash and equivalents as of Sept. 30.

What drove the deal? Arris CEO Bob Stanzione said in a prepared statement that with the acquisition of Tandberg TV, “we are able to expand on our vision to be the global leader in the provision of digital IP [Internet-protocol] infrastructure and to enable voice, video and data to be delivered over integrated broadband networks from the content provider to the headend to the home.”

Jan Christian Opsahl, chairman of Tandberg TV, added, “Ongoing industry consolidation among our key customer base creates a demand for companies that can offer an increasing scale and scope of supply on a global basis.”

Arris reported revenues of $657 million for the first nine months of 2006 and said fourth-quarter sales would be in the range of $220 million-$230 million. Tandberg TV estimated 2006 revenues to be about $350 million.

 

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